The Micro-Mobility Business Model is Falling Through the Cracks
By Charlie Welch, ZapBatt CEO and Amiad Zionpur, ZapBatt COO
Significant challenges have driven e-bikes from niche to mainstream in the last 18 months. With climate change on the rise and an uptick in gas prices, the micro-mobility industry is rapidly maturing. These changes could mitigate the effects of climate warnings, battery supply chain issues driving up the cost of EVs, and rising gas prices deterring people from car ownership and towards more economical alternatives.
To accommodate a staggering 240 percent growth rate in sales, pavements around the globe have welcomed an increasingly prevalent species: the e-biker. Cities have embraced sharing platforms, and operators have announced new e-bike infrastructure plans and laws to meet this demand.
Since the surge of micro-mobility, we’ve begun to see cracks in the industry. There have been concerns surrounding issues with sustainability and financial feasibility. We are learning that the original business model is slipping through the cracks, leading to short-term growth but seeming unsustainable in the long term.
Suppose we create a more sustainable and profitable industry. In that case, micro-mobility will have a positive effect, not only on sustainability for consumers but also on the future of the world’s climate as well.
CITIES ARE THE FUTURE
Studies show we will continue to see the growth of urban populations. According to the World Bank, the world’s urban population will increase from today’s 4.4 billion to 6 billion by 2045, with nearly 70 percent of the planet living in cities by 2050.
Urbanization creates enormous transportation challenges. Public transport, already struggling in many global cities, will experience even more strain. Municipalities are attempting to reduce car use, a trend likely to continue as micro-mobility options are quickly growing.
CleanTechnica said that Miami e-scooter manufacturer Fluidfreeride’s sales are up more than 70 percent over March 2021, while another manufacturer, Bird, saw sales increase 60 percent in March 2022. E-bike sales will reach 40 million units worldwide this year, with 300 million in circulation—a 50 percent increase from 2019.
So if it’s a booming industry, what’s the problem?
WHAT’S IN THE BATTERY
As micro-mobility continues to soar, the battery remains core to both the advancements and challenges in the sector.
An issue is that the leading e-bike and e-scooter manufacturers use the same type—and often even the same brand—of batteries, leaving these companies constrained by what the battery can do.
Buying options abound for a consumer looking to buy an e-bike or e-scooter. However, in reality, the choice only lies within the different cosmetic bells and whistles of the bike or scooter, with no real fundamental differences in its most essential part—the battery.
For Mobility-as-a-Service (MaaS) companies running businesses that rent out these means of shared transportation, much of the focus has been placed on the immediate purchase price rather than the long-term savings and conveniences.
The industry must improve conveniences, sustainability, and safety to advance.
Currently, e-bike riders have to wait about 6-8 hours to fully charge their bikes. If the battery dies, there is no quick charging option that can quickly get them on their way again without damaging the battery. The same is true for ride-sharing programs. When batteries die, e-bikes and scooters must be picked up and transported (most likely by gas-guzzling ICE vehicles) to and from charging sites. Worse yet, the batteries are swapped out, causing a sustainability nightmare.
Typically, e-bike batteries last 2-4 years, depending on how people ride the bikes. While it seems that riding an e-bike is green, the fact is that every few years, these batteries are thrown away. Also, let’s not forget about the carbon footprint of making these batteries.
According to the New York City Fire Department, there have been nearly 200 fires caused by micro-mobility devices in New York City alone this year. At issue is the influx of e-bike delivery drivers, many of whom use bikes with cheap batteries that overheat and are damaged from frequent use. Many people need to be made aware of the fire dangers of lithium-ion batteries within today’s micro-mobility applications. As e-bike popularity continues to soar, so will related fires unless new battery technologies are implemented.
The cosmetic features and short-term thinking in the micro-mobility space need to be removed and replaced by a change in the battery type. Only then can significant change in the industry—affecting manufacturers, MaaS companies, retailers, consumers, and cities—occur.
TAKE A LOOK AT PROFITABILITY
The battery is the gatekeeper to profitability. Nearly every aspect of the business model, including labor, up-time, warehousing, capital, and ridership, is built around battery performance. And historically, deciding which battery to choose has come down to two metrics: cost and range.
To tackle this, companies need to flip how they assess batteries. Moving on from cost and range, now is the time for companies to understand the entire lifetime expense of a battery. Their bottom line is affected by battery sustainability, safety, and charging times.
Currently, charging e-bikes and e-scooters for ride-share programs is inefficient, expensive, and time-consuming. It involves removing them from the streets and loading them onto trucks – usually ICE vehicles – to transport them to offsite warehouses. The battery recharging process can create an entire day of un-use, reducing operators’ revenue opportunities.
It is a particularly unwieldy and unsustainable process in large cities, where charging and maintenance must occur at scale. For example, according to Laura Fox, General Manager of Citi Bike, regular bikes can be used 10 to 15 times per day in New York, with e-bikes not far behind. That means a lot of costly – and unreliable – maintenance, as charging and operations are estimated to eat up 60 percent of costs.
END BATTERY SWAPPING
One way operators have attempted to improve efficiencies is through swappable batteries. Rather than collecting e-bikes and e-scooters and transporting them to a central warehouse for charging, micro-mobility companies send crews to swap batteries on-site. This cuts down on congestion, keeps e-bikes and e-scooters in circulation, and prevents lost revenue. Sounds good, right?
However, while the process saves on operational costs, it wastes the batteries. Often, batteries that still have 30-40 percent of life left are swapped for ‘full’ ones, which, due to degradation, can be as low as 80 percent of their original capacity. With e-bike batteries capping out after about 500 charging cycles, this swapping significantly reduces the battery’s lifespan.
To run the swappable system efficiently and allow additional battery charging to keep the process moving, e-scooters require an estimated 1.5 to 2 battery packs. A fleet of 10,000 e-scooters would need at least 15,000 batteries. This system is costly.
Currently, the industry views batteries like the computer hardware industry views printer ink cartridges. It works on a similar model: swap old toner cartridges for new ones. However, there’s a key difference: up to 30 percent of toner cartridges get recycled. In contrast, less than 1 percent of Lithium-ion batteries get recycled in the US and EU.
There are also significant safety issues with swapping batteries. Battery packs are easily damaged, and the sheer volume of swapping results in exposure to the elements and regular mishandling. Damage caused by battery swapping can also increase fire risks.
THE FUTURE NEEDS A NEW BATTERY
The existing micro-mobility models have room for improvement if we want to create a profitable industry.
Cheaper e-bikes and e-scooters can help, but more is needed to drive down costs and improve efficiency dramatically. Instead, we must look at the battery to enhance efficiency and sustainability.
We’ve seen that swapping batteries isn’t a long-term solution for costs or the environment. Ultimately, the industry needs to consider drastically cutting the volume of manufactured batteries and instead use batteries that last longer. Battery production is carbon-intensive, particularly when you add in the carbon footprint of shipping—so the fewer batteries we need to produce, the more sustainable future we create.
The only type of swapping that makes financial sense is changing longer-lasting batteries into next-generation designs, essentially making the battery the long-lasting “CPU” and the most critical part of the vehicle.
Further, because the battery is the cause of many operational problems and costs, finding solutions is critical for both the bottom line and the planet. Alternative battery technology and moving the industry away from cheap batteries can shift this trajectory.
LITHIUM-TITANATE IS THE FUTURE
New micro-mobility battery chemistries like LTO can play a pivotal role in the micro-mobility business models of today. Faster charge times can keep e-bikes and e-scooters on the streets for more extended periods of time, longer life spans of batteries can reduce the number of new batteries that need to be purchased, and safer chemistries can reduce the danger of fires. This is a game (ride) changer for the industry. It’s time to swap out old battery chemistries with the new.