An e-scooter company is begging cities for more regulation

Spin, which operates electric scooters and bikes across North America and Europe, is downsizing. On Jan. 7, Spin’s CEO Ben Bear announced the company would be pulling out of all of its markets in Germany, Spain, and Portugal, as well as seven places in the US with “open markets,” where local officials place no limits on the number of micro-mobility companies allowed to operate. It will be pulling out of 21 markets altogether and laying off a quarter of its staff.

Competing in such crowded markets, Bear says, means it’s nearly impossible for Spin to turn a profit. The decision by the Ford-owned micro-mobility company sends a clear message to city leaders around the world: please, regulate our industry. 

Why e-scooter companies seek regulation

When dockless e-scooters first rushed onto city streets around 2017, they generated a wave of interest, as well as a backlash for cluttering sidewalks and injuring riders and pedestrians. In response, cities like Los Angeles, San Francisco, and Washington DC began to regulate these companies, setting limits not just on how they may operate, but how many vendors may operate within city limits by issuing permits through a competitive bid process.

It turns out, these limited permits are good for the scooter companies themselves because they help manage supply and demand. Where numerous e-scooter vendors have been allowed to enter a market without restriction, it creates “an uncertain operating environment” and “race to the bottom pricing,” according to Bear.

Spin says that over the past two years, it’s gone from having just 35% of its business in cities that limit micromobility suppliers to 75%. The company is concentrating even further after pulling out of these 21 hyper-competitive open markets. Its decision to exit open market cities, the company’s leadership says, will allow it to concentrate its resources on cities where it already has a strong presence as the best way to grow.

“In an industry as immature as micro-mobility, there needs to be a mutually beneficial partnership between cities and private companies,” a Spin representative said in an emailed statement. “Operators needing to make a profit must be balanced with addressing the needs of the city, like transportation equity.”

E-scooter companies also look to local regulations to manage competition because of the way demand for scooters is impacted by geography. As urban micro-mobility scholar and visiting fellow at the Harvard Kennedy School David Zipper explains, operating in less-dense areas is more costly for companies: people ride less frequently, as fewer trips fall in the micromobility “sweet-spot” range of one to two miles, and the operational costs to collect and service a fleet of scooters is higher. In these conditions, competing with other companies for riders often isn’t worth it. But a competitive permitting process limiting the number of players in town helps even out supply.

“What we’ve learned is that we cannot invest in cities in a way that is profitable unless we have limited or exclusive markets,” Spin continued in the statement. Limited vendor markets allow them to hire skilled workers to do scooter pickup and repair instead of relying on gig workers—as they used to and as other companies continue to do—and invest in technology advances for their scooters and bikes.

Winners and losers in the e-scooter market

The micro-mobility industry is also consolidating. Lime, which received a $170 million investment from Uber and Alphabet in 2020, is among the only large players in the US, alongside Bird, which went public via a SPAC in Nov. 2021. Meanwhile, Skip, an early entrant into the market in 2018, declared bankruptcy in 2021. In Europe, companies Voi and TIER have dominated, mostly by crowding out everyone else in the cities where they operate.

This has only made city permits to operate electric scooters more valuable. Washington DC reduced the number of permits it awarded in 2020, and Atlanta followed suit in 2021. In April of 2021, New York City—the coveted prize micro-mobility companies had been waiting for—finally entered the e-scooter market after banning them entirely for years due to a state law. In April 2021, It doled out only three permits for its pilot program to Bird, Lime, and Veo.

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