Ford's Exit from Electric Scooters Leaves the Playing Field to the Micromobility ‘Unicorns’

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Ford?sells off its electric scooter unit?Spin to Tier Mobility – but will remain a “strategic investor” in the latter.

The sale will mean that Tier Mobility gets to take over all of Spin’s operations, giving the Berlin-based scooter company its first foothold in the North American market. While the sale price was not disclosed, the CEO of Tier said it was an all-stock deal. This sale comes just a month after Spin laid off nearly 25% of staff and pulling out of almost every “open permit city” — jurisdictions that don’t have a permit system for the number of scooter operators. That included several cities across the US as well as Germany, Portugal, and Spain.

Spin first launched in March 2017 in Seattle as a dockless bike company following in the footsteps of the booming trend in China. But not long afterwards, the company pivoted to electric scooters instead after seeing Bird’s success in California. Just a year later, at the height of the scooter boom, Spin was acquired by Ford for $100 million as a way for the auto giant to branch out into new forms of mobility. But that was during the height of the initial scooter boom, when expansion was all the rage and profitability a bit more of an afterthought. The Verge article reports that Ford has in fact been considering the sale of Spin for over a year now, amidst a re-prioritisation of internal resources to electric and autonomous vehicles – leaving less appetite for expensive side-projects.

Tier Mobility, on the other hand, is one of Europe’s largest micromobility companies (including electric scooters, bikes, and mopeds in its offerings) and operates in over 180 cities across 19 countries in Europe and the Middle East. It has been on a bit of a purchasing spree lately, acquiring both?Vento Mobility?and?Nextbike?in the last few months.

Spin’s current CEO Ben Bear commented on the sale:

“What this combination really gives us is a path to global leadership that really didn’t exist as a standalone entity,” he said. “This is what Tier does, and?with SoftBank’s backing, they’re in a position to play a really long game and win the market, which we’re excited about.”

Tier’s own CEO Lawrence Leuschner had some interesting comments of his own to make as well, saying that he agrees with Spin’s strategy of pulling out of open permit cities and focusing on markets that limit competition. “I think the overall market, not only in the US but globally, goes to a licensed model, where the city is going to choose their two or three players,” he said. “That’s going to be the future.”

Personal Comment:

While the Verge article posits that Ford’s main motivation for selling Spin is to focus more on the transition to EVs and autonomous vehicles, this skips over a curious trend that seems to be happening across the micromobility landscape. This is where native ‘micromobility-first’ companies appear to be winning out against rivals that simply operated a micromobility service as a bit of a side-hustle. Think Uber’s?sale of its Jump micromobility unit?to Lime (yes, all micromobility companies have names with four letters or less) last year. These are much larger companies with sophisticated operations in more established markets, and they are essentially raising the white flag to companies many times smaller than them in the micromobility space.

At the same time, these smaller ‘micromobility-first’ companies are rapidly maturing, with Bird?successfully listing on the New York Stock Exchange?in November and Lime, Tier and Voi all looking set to go public this year as well – and all with ‘unicorn’ valuations of between US$1-2 billion each.

What to make of this? Well, several things. Firstly, while the micromobility space still has relatively low-barriers of entry compared to the automotive and ride-hailing businesses, this doesn’t mean it’s an easy business to make money in. Otherwise, Ford and Uber would still be in the driver seats of their own micromobility units. Profitability is going to require scale, and a longer-term investment horizon.

Secondly, it’s worth taking stock in Tier’s CEO’s comments about the future of the sector being in cities with a licensed permitting model. As micromobility and its business models mature, cities need to treat it more like a form of soft-infrastructure – which requires active engagement and governance frameworks (the wild west days of companies just entering a new market by dumping hundreds of scooters on the street is no longer viable for anyone). Even better would be if this soft-infrastructure of mobility as a service is paired with actual infrastructure, such as investments in better bike-lanes and parking locations.?

Lastly, this move to a licensed model in more and more cities will itself create the conditions for even more consolidation of micromobility companies. Acquiring competitors with existing licences to operate in cities will be a far easier way for companies to expand quickly than to try and win those licences gradually when they come up for renewal at different points in time. Furthermore, cities will likely want to award licences to operators with strong brands and proven track records. Soon the days of micromobility being seen as a low barrier of entry market will be a thing of the past – and that’s probably a good thing.

Written by?Bobby Chen, RISE Mobility & Systems (Electromobility)