TL;DR: The global market appetite for last mile EVs (e-vehicles) is driven by 1) overall more efficient mode of transport, 2) the push for eco-friendly options, and 3) shared services over private ownership.
Over the past month, I had my first try at Bird, Limebike, Spin and Jump - the hot new e-scooter and e-bike startups that entered SF. This got me thinking about the overall transportation industry, in particular the last mile (colloquial phrase for: movement of people from a transportation hub to a final destination) market powered by the onset of the e (electric)-economy.
The growth spurt for these EV options is incredible. Data stacked against each other shows the overall market demand is lucrative; it grows with an avg CAGR of 7.8%, and at that rate can foresee an $84.8B overall market in 2025. One additional insight is that e-Scooters in 2016 owns 37.7% category share, but by 2025 is expected to own 45.3%, ranking as this industry’s top mode of transportation.
China owes a ton of it’s skyrocketing sales of EVs to the growth in large-scale urbanization across the country. China and Taiwan are in fact home to the manufacturing of these vehicles (e.g. Xiaomi). It makes sense that they produce and buy at their own home – an efficient supply and demand network. India is anticipated to be the second-largest market for all types of mentioned EVs. The e-moto market in all of APAC is expected to be small, due to its perceived reputation as a luxury alternative and not a necessity (contrary to other traditional gasoline vehicles, fuel-powered motorcycles and mopeds are still more affordable and mainstream).
Europe’s major producers are BMW, Energica, and KTM, which also makes it easier to supply these vehicles in the EU. US’s lacking and fragmented forms of public transportation across the nation also help pave way for overall innovative transportation industries to rise. Though industry is still dominated by automobiles, with urban areas mainly entrenched by roads and highways, they are still an early adopter of EVs as new products (coupled with new on-demand services) are entering the market.
Beating Traffic & Terrains:
People want solutions that provide faster, innovative, and more efficient traveling experiences. The most densely populated urban metropolitans sit in China. That’s one primary reason why 2-wheelers work – their ability to maneuver easily through congested streets and cars. In addition, a ton of metropolitan cities in China are flat, making it easier to ride.
In the US, these last mile solutions began predominantly in flatter terrains like NYC, DC and LA, both in the form of electric and non-electric bikes. Governments in these cities have focused on manufacturing bicycle-friendly streets parallel to cars, which enabled for increased safety and speed for cyclers. Commuters in urban dense areas within two miles are always incentivized to get themselves to work faster, bolstering demand for alternatives to public transport or driving.
However, as the market expands to hilly terrains like SF, more eyes were set on EVs as they’re able to carry human weights (up to 200 lbs for e-scooters) across non-linear and slope-filled streets, thanks to its battery powered engines. Additionally, logistics companies in all these cities can now use EVs to power delivery services (think Jump bikes or Scoots with a basket/cart to store food for UberEats deliverers), at cheaper costs and faster transport time when compared against using a car.
EV’s overall growth can be attributed to the push for environmentally friendly alternatives long-term. Its positive impact specifically on reducing energy and traffic congestion issues observed in the recent past is a plus for governments and cities. Pollution levels and carbon footprints in China (along with changing consumer preferences) has led to the unregulated explosion of shared normal bikes led by Mobike (acq by Meituan-Dianping), Ofo, Bluegogo (acq by Didi-Chuxing), and couple others (word has it that all these competitors are moving into e-bikes as well, unsurprisingly).
Additionally, the EU is planning to increase EV sales to improve the air quality of the region. 27 EU countries have started imposing taxes on CO2 emissions and 15 countries are providing tax benefits for overall EVs (in Amsterdam, for example, a large number of taxi cars are Teslas). Though environmental focus is losing momentum under the Trump administration, California is still pushing for 1.5 million zero emission vehicles by 2025.
Overall, the global push for greener alternatives has led to a slow but steady shift in the vehicle landscape and how cities think of design, distribution and electricity infra.
Consumers increasingly prefer not to own vehicles, but instead share or rent them. Also coined the “gig economy”, the sharing of transportation services has been around for a while, throttled by the advent of Uber, Didi, Grab, Ola, Lyft and others. Like how on-demand drivers made it easier to live in urban and dense areas without buying a car, so does cutting costs via on-demand last mile solutions. As price tags for more sophisticated vehicles (electric, gas or manual) rise (especially in APAC where the average income is less), the sharing of them becomes a more affordable and convenient alternative.
In particular, bikes are expensive to own (averaging $850 in U.S., $500 in China), let alone electric powered ones ($2K+). People prefer to rent and borrow as opposed to privately owning them (not to mention the liabilities and maintenance costs associated with them). Uber has also taken swift measures to penetrate the e-bike market and has since acquired dockless startup Jump, bridging the future of bike and ride-sharing (and likely e-scooters) to its platform and now competing with the likes of Limebike, Spin, Ford GoBikes and Zagster.
Young users, mostly millennials, dominate the e-scooter sharing sector. They average $500 per unit (at least that's the price tag sold by Xiaomi to Spin and Bird), which is likewise still expensive, though cheaper on average compared to e-bikes and definitely e-motos. Still, sharing is a preferred choice, and with the advent of Bird, Spin and Limebike, it paved way for both “urban professionals” and recreational activity use cases and has a bright future for taking over the last mile EV economy.
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Overall, this is an exciting time for the electric revolution in the last mile industry. Travis ZanderVanden, who founded Bird, said that there’s a paradigm shift, and that “it’s the biggest revolution in transportation since the dawn of the Jet Age.” Another friend of mine made a great point here:
Africa skipped over desktops and laptops straight over to mobile. China skipped over credit cards and went straight to mobile pay. America chose cars and highways instead of public transport, could we turn that disadvantage into a win by leapfrogging to shared, motorized personal transport?
I plan to follow-up soon with another blog post. I talked about who are the consumer segments that matter, why last mile EVs are here to stay, and how they are continuing to thrive. Next, I’ll talk about what the actual products are today (specific to the US market for focus), and derive some insight from the competitors at home.
References: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
I'm Daniel, and I'm an Investor @ Obvious.com. Previously, I was a Product Manager @ Dropbox and Uber, & studied CS at Stanford. I also write on Medium.
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