On-Demand Transit Market Report Q3/2022

On-Demand Transit, On-Demand Ridepooling, Microtransit, Demand-Responsive Transit – whatever you call it, it's everywhere! But where exactly and what is the market's trend look like? Let's find out in the Q3 2022 On-Demand Transit Market Report!

As always, all findings of this report series are based on the On-Demand Ridepooling World Map, which gets continuously updated.

By popular request, I have now also made maps per year which show only the services launched in the respective year: 2012 ? 2013 ? 2014 ? 2015 ? 2016 ? 2017 ? 2018 ? 2019 ? 2020 ? 2021 ? 2022

(Clearly, Google Maps is not the ideal tool for this, so I had to make an individual map for each year, which makes toggling through the years pretty cumbersome. But hey, it's for free and easy for me to handle. But if you think you know a better map tool which can be easily fed and updated from a spreadsheet, then please leave your suggestion in the comments below!)

The third quarter of 2022 was strong with 53 new service launches. Cumulative, 2022's first three quarters have produced 140 new services, which puts 2022 in a promising position to contest 2021 as strongest year ever. But even if this record may not be broken, 2022 will definitely end with more new service launches than 2019 and 2020 and thus continue the strong market growth trajectory. Just like in the years before, the by far largest share of new projects is coming from the public sector, but B2B (employee transport, universities, etc.) has also picked up, although it remains to be seen if that's a persistent trend.

The total tally of On-Demand Transit projects around the globe is now scratching the 900 projects mark of which approx. 550 are currently running.

A large share – approx. 70% in the B2G segment and approx. 50% in the B2B segment – of the new projects are pilot projects, which is an indication that many markets are not yet in a steady state. Some markets, like the USA and Germany are approaching the end of the piloting phase, as it is noticeable from the growing number of project renewals which transition former pilots into the regular public transit service. That said, there are also still new pilot projects launching in those markets as well so that a full picture of the steady state market size is probably not going to be visible for ca. another two years.

My prediction is that most of the markets which are approaching the end of the pilot phase will continue somewhere between Path 1 and Path 2, i.e. continue to grow, albeit possibly (and likely) at market-specific, different rates, which might be slower as in the piloting phase.

Speaking of specific markets: Europe and North America continue to go head-to-head with the USA and Germany the largest national markets (both absolute and growth-wise). Asia has seen slower growth in 2022 compare to the years before, although Japan continues to be the main driver.

Tech Supplier Landscape

The ranking of the On-Demand Transit tech suppliers continues to be led by Via with a massive margin. Via has been launching 15 new projects in average per quarter since 2019, which is both impressive and unchallenged. But competition is increasingly fierce and the battle for the second place in this ranking is lively. This benchmark weighs currently running services higher than total number of services, which results in a certain level of volatility between each quarter.

I am aware that this benchmark – although eagerly awaited by many in the industry – has some flaws as it does not account for project durations, fleet sizes, contract values etc. and thus doesn't say anything about the quality of the projects. Therefore, for some time now, I am also examining the regional market share of the biggest players in an attempt to give a more complete overview. Here, it becomes clear that Via is strong in many regions, but only truly dominant in the anglo-saxon markets.

(Please note: I have changed the definition behind this diagram to only reflect currently active projects. Therefore, this version of this diagram CANNOT be compared to earlier versions!)

Status of the "Big 5"

The last few months have been pretty tough on the tech industry in general and the mobility tech sector in particular. Raising money has become much more difficult. Investors are demanding profitability, which is anything but easy to achieve in the mobility space. VCs are prioritizing their existing investments over new ones. And the overall economic situation also impacts customer decisions. Naturally, the On-Demand Transit tech suppliers have also been exposed to this situation and as it – arguably – impacts the biggest player the most, I have decided to take a closer look at what I decided to call the "big 5". The "big" refers to the funding and not necessarily to the number of projects as shown in the tech supplier ranking chart above. Therefore, this illustrious circle consists of Via, Swvl, Padam, ioki and MOIA. As only Swvl is reporting numbers due to its public listing, I decided to use the cost of employment as proxy to get a comparable indication of the burn-rate from which I then drew conclusions to assess the outlook of each player.

Via

• Employees on LinkedIn: 1,244 (Via, Remix and Fleetonomy combined)
• Working location of majority of staff: USA, Israel
• Cost of employment: 9-figure USD p.a.
• Funding situation: Via has raised close to 800m USD in total with the last funding round of 130m USD in November 2021 (source). Via has announced its IPO, but has so far not filed for it.
• Outlook: Via's very high staff costs – due to overall size and location in high-income countries – are likely to increasingly become a liability, as Via has missed its window of opportunity for going public in early 2022. Considering the burn-rate that Via is likely to have, some hard course corrections might need to come sooner than later, incl. staff cutbacks and selected market exits. Or Via might have to bite the bullet and raise fresh money – at presumably very unfavorable conditions. Either way, we might see Via's phenomenal growth of recent years to slow down.

Swvl

• Employees on LinkedIn: 1,443 (Swvl, Viapool, Shotl, door2door, Urbvan, Volt Lines combined)
• Working location of majority of staff: MENA, LatAm, Europe
• Cost of employment: mid-range 8-figure USD p.a.
• Funding situation: Swvl is the only player in the On-Demand Transit tech space that has gone public so far (NDQ: SWVL) via a SPAC merger.
• Outlook: In Summer 2022, Swvl changed its strategy from hyper-growth to profitability and laid off 30% of its workforce and divested selected markets. Swvl has a considerable advantage with regards to employment costs due to its teams being predominantly located in emerging markets. While undoubtably many challenges remain, its IPO just before the real economic turmoil begun and Swvl's subsequent quick adjustment of the strategy may have set Swvl in the right direction as it was recently able to announce that some markets have turned adjusted EBDITA breakeven. On the other hand, further market expansion into developed nations will also come with increasing employment costs. "Find the right balance" seems to be the name of the game.

Padam (Siemens AG)

• Employees on LinkedIn: 86 (+ unknown "borrowed" staff from HaCon)
• Working location of majority of staff: France
• Cost of employment: low 8-figure USD p.a.
• Funding situation: Padam is fully funded by Siemens which acquired Padam in 2021.
• Outlook: It's safe to assume that Siemens did not acquire Padam as some "innovation playground", but as expansion of its mobility software portfolio which requires Padam to function as serious business. While it's (unpublished and) unknown if Padam is anywhere close to profitability, the Siemens-Padam-package looks very solid as it gives Padam access to Siemens' global presence and sales force and opens interesting product opportunities to create a strong USP by integrating Padam's DRT technology with its sister companies' technology such as HaCon, EOS.Uptrade or Bytemark. On the flip-side, Padam's growth speed might have a "natural" limit, as Siemens is unlikely to massively increase its financial contribution to Padam to allow it to ramp up its team size or geographical scope aggressively.

ioki/CleverShuttle (Deutsche Bahn AG)

• Employees on LinkedIn: 233 (ioki and CleverShuttle combined)
• Working location of majority of staff: Germany
• Cost of employment: mid-range 8-figure USD p.a.
• Funding situation: ioki and CleverShuttle are wholly owned and funded by Deutsche Bahn (German National Railways "DB", 100% state-owned). ioki is a DB venture, CleverShuttle was acquired to 75% in 2020.
• Outlook: By belonging to state-owned Deutsche Bahn, ioki and CleverShuttle have the luxury of not having to make profitability their primary objective. This gives them a massive commercial advantage in competitive tenders, which clearly shows from the large number of recently won projects. As long as DB's top management sees value in having an in-house On-Demand Ridepooling software and operations provider, ioki and CleverShuttle are in an extremely comfortable position. Could this be at risk? Realistically, only if politics get involved. This might happen if Deutsche Bahn continues to deliver as poor service quality in its core business (passenger rail) as it has been in the past months and years, which could increase the scrutiny of how DB is spending its (public) money. Or if German tax-payer money is continuously needed to fill the gaps in the P&Ls of DB's ventures abroad such as Arriva, which could increase the scrutiny of why DB should have another loss-making venture that is trying to grow its business in markets outside of Germany. Or if railway infrastructure is finally removed from Deutsche Bahn's business and placed into a directly state-controlled infrastructure management company – as many experts have demanded for years – which would dramatically reduce DB's financial wiggle room for keeping in-house software development instead of procuring the same technology from an existing supplier market as needed. Will any of this happen in short term? Definitely not. Which means ioki/CleverShuttle will continue to aggressively grow their market share in Europe in the foreseeable future.

MOIA (Volkswagen Group)

• Employees on LinkedIn: 384 (excluding MOIA Operations GmbH)
• Working location of majority of staff: Germany
• Cost of employment: mid-range 8-figure USD p.a.
• Funding situation: MOIA is wholly owned and funded by Volkswagen Group
• Outlook: Life in a mobility venture of an OEM is sweet! Money is of no concern. The office is beyond hipster. The coffee is delicious. The marketing team can run wild (and does not have to account for its impact). And the product? Oh, it's simply beautiful. That is, until the OEM's top management has a bad day (or is replaced altogether). Then, things can go sour quite rapidly. And frankly, it sure looks like that's happening right now at Volkswagen. First, MOIA's CEO Robert Henrich left (with a bang, as the between-the-lines of the press release suggests), then Volkswagen decides to divest ARGO.ai for which MOIA was supposed to become the test-bed (which IMO is a strong sign for the end of Volkswagen's ambitions in Level 5-AV development) and finally, Volkswagen sells (probably rather gives away) its other very expensive mobility venture WeShare to competitor Miles – which signals the beginning of the end of Volkswagen's mobility service adventure. So with Volkswagen following suit of its German rivals Daimler and BMW, who "got the hell out of mobility" a couple of years earlier, what does this mean for MOIA? Well, definitely not good news. Let's see how soon we will see another announcement by Volkswagen...

Conclusions

Q3 2022 was a strong quarter with over 50 new On-Demand Ridepooling services launched. The market's characteristics are unchanged with the public sector driving growth, but at the same time also accounting for a large share of pilot projects and very small fleet sizes (5 vehicles in average). While some markets are approaching the end of the piloting phase, it is still too early to say how large the steady state market really is going to be. It's clear that On-Demand Transit has established itself as important addition to the public transit service mix, but today's very large number of new projects – which might be fewer in a steady state market – are fiercely contested by a very crowded tech supplier market. Which means that further market consolidation seems very likely and that the bigger On-Demand mobility solutions providers are likely going to try to expand into other use-cases and market segments to broaden their business opportunities.

As for my forecast for the remaining weeks of 2022: By my estimate, 2022 with close with 200 On-Demand Transit projects launched globally, which comfortably puts it ahead of 2019 and 2020, but behind 2021 with its hitherto record of 226 launches. Feel free to bet against me in the comments section and I will reveal who got closest in my 2022 recap article!

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Disclosure, Notes & Disclaimer

• I am working for Swvl, one of the main players in the DRT Ridepooling space. This series of articles is independent from my work and I will therefore try my very best to keep them vendor-neutral. That will not prevent me from expressing pointed opinions about the state of the market or market participants. However, should you ever have the impression that I am not being fair in how I present my findings, I appreciate if you send me a message and let me know.
• All findings shared in this article are backed by an extensive dataset, but should always be understood as informed indications, not hard facts.
• Possible deviations of facts and figures to previous articles of mine are most likely caused by retroactive additions to the dataset, which have been made possible in part by feedback and support from the On-Demand Ridepooling community. I appreciate the overwhelmingly positive and open response to my articles!
• The?Google world map?gets updated in the background, so it might show services which are not yet reflected in the analysis of this article.
• If interested, please see the?notes?in my first article on how the data behind the world map has been compiled.
• The views expressed in this article are my own. They do not purport to reflect the opinions or views of my current employer.