McKinsey & Company released information about micromobility. The business model for micromobolity such as e-scooter gained tremendous attention recently, as interest builds and new investment dollars flood into the space. But questions concerning the ultimate size and scope of the shared micromobility market have also emerged. The path to profits is very fast due to the low price of buying e-scooters and electric bicycles.
Stakeholders have invested more than $5.7 billion in micromobility start-ups since 2015, with more than 85 percent targeting China. The market has already attracted a strong customer base and has done so roughly two to three times faster than either car sharing or ride hailing. In just a few years, for instance, several micromobility start-ups have amassed valuations that exceed $1 billion.
Two circumstances have driven this accelerated expansion. First, most launches of shared micromobility take place in conducive environments. Urban consumers already value and use solutions for shared mobility, such as car sharing, ridesharing, and e-hailing.
Second, the economics of shared micromobility are largely favorable to industry participants. Companies find it much easier to scale up micromobility assets (for example, electric bikes) compared with car-based sharing solutions. For example, the current acquisition costs of an electric scooter are about $400, compared with the thousands of dollars required to purchase a car. Micromobility offers some city dwellers an escape from that stress: higher average speeds, less time spent waiting or parking, a lower cost of ownership, and the health benefits of being outdoors.
How big is it? Micromobility could theoretically encompass all passenger trips of less than 8 kilometers (5 miles), which account for as much as 50 to 60 percent of today’s total passenger miles traveled in China, the European Union, and the United States. However, McKinsey & Company estimate that shared micromobility will cannibalize only about 8 to 15 percent of this theoretical market. Constraints include its suitability for relevant mobility use cases (for example, limited space when going shopping), customer adoption, weather conditions, age fit, and micromobility’s lower presence in rural areas.
The company base-case estimate of the shared micromobility market across China, the European Union, and the United States is, $300 billion to $500 billion in 2030. To put that into perspective, it equals about a quarter of our forecasted global shared autonomous-driving market potential of roughly $1,600 billion in 2030.
The micromobility phenomenon has the potential to disrupt the industry. Whether the disruption it causes matches the hype generated so far will largely depend on how cities react to the service.
The report does not take into account the serious injuries and loss of life that could happen.