Public authorities must be actors in the development of new mobility solutions and not spectators. Paris launched a call for tenders on free floating scooters; it redistributed the cards and provided a glimpse of a service combining an efficient business model and service security.
We all know the term “snowball effect”: when a single event is the cause of a multitude of others. This is a common phenomenon in the new mobility sector and anyone has only to look at our streets to realize it. The arrival of Uber a few years ago and the profusion of VTC applications that exist now even generates the creation of aggregators of these applications to access to the best prices.
Scooters have not escaped this phenomenon. Since the installation of Lime in Paris in June 2018, the capital has seen the deployment of more than a dozen players of free-floating scooters and … almost half of them have already disappeared. How come? Operators of these services face two major constraints: a lack of economic performance and a legislative framework which is more and more constrained due to the operating abuses.
Many players have chosen to limit the quality of their scooters and therefore the costs associated with their purchase or production in order to meet the growing demand and deploy larger fleets of vehicles. What are the consequences of this strategy? It results in scooters that break down before generating the expected revenue (amortization over 115 days for an average life of 90 days according to a BCG study) and additional warehouse operating costs to repair and redeploy these vehicles. A scooter should be used a minimum of 5 times a day to be profitable ; today it is only used 2 times per day on average.
This service model was new and were lacking a legislative framework, the abuses quickly appeared: badly parked scooters, degraded scooters, circulation on the sidewalks without safety equipment at an average speed of 25 km / h, accidents… The need to supervise became mandatory, Paris city entity published a call for tenders on December 17th, 2019 to limit the number of operators to 3.
This announcement has already scared some players who do not wish to engage in such a concentrated market and who are shifting to other cities. For those still in the race, significant efforts are required: regulation of parking places, modification of the product such as the double brake for more security, obligation to have vehicles that are easier to maintain, recycling of used batteries…
We can see the influence of government decisions on the profitability of private actors. Indeed, the mayor of Paris will authorize 15,000 scooters in its streets, or 5,000 per actor. With more robust scooters, players will logically have more demand to satisfy and the opportunity may be to find an economic balance. We should also expect to see a significant increase in quality of service thanks to the standardization of safety rules and a race towards innovation to differentiate without a price war.