The Micro-Mobility Business Model is Built on a Foundation of Sand

­The micro-mobility industry can be a legitimate answer to 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.

These significant challenges have driven e-bikes from niche to mainstream in the last 18 months. Across the world, pavements have welcomed an increasingly prevalent species: the e-biker. In response, cities have embraced sharing platforms, and operators have announced new e-bike infrastructure plans—and laws—to accommodate a staggering 240 percent growth rate in sales.

However, since the boom, we've begun to see cracks in the micro-mobility industry. Issues around sustainability and financial feasibility have surfaced. We are learning that the original business model is built on a foundation of sand, leading to short-term growth but appearing unsustainable in the long term.

Micro-mobility is undoubtedly positive, and there are ways to create a more profitable and sustainable industry for the good of the consumer – and the climate.

The future is urban.

We live on an increasingly urban planet. 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 cracking in many global cities, will experience even more strain. Municipalities areattempting to reduce car use, a trend that's likely to continue.

Into the space come the white knights of urban transportation: e-bikes and e-scooters. Citi Bike, owned by ride-hailing company Lyft, is the largest docked bike-sharing system outside of East Asia. The company reported that e-bikes accounted for 32 percent of its rides in New York in 2021, comprising only 20 percent of its total fleet. 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 reach40 million units worldwide this year, with 300 million in circulation—a 50 percent increase from 2019.

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Figure 2. An inside look at ZapBatt’s LTO 20 plus year lifespan battery

So if it's a booming industry, what’s the problem?

Let’s take a closer look at 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.

Conveniences

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.  

Sustainability

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. We can scratch our heads trying to figure out how to recycle all of these batteries, or we can make them last longer.  

Safety

More than 100 e-bikes have caught on fire in New York this year alone. This was caused by things like 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 are unaware 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. 

Did someone mention 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 simply cost and range, now is the time for companies to understand the full 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.

Battery swapping isn't the solution.

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, crews are sent out 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 type of swapping significantly reduces the lifespan of the battery.

To run the swappable system efficiently and allow additional battery charging to keep the process moving, things like 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.

It's time for 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 that's not enough to dramatically drive down costs and improve efficiency. 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 iscarbon-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 swapping longer-lasting batteries into next-generation designs, essentially making the battery the long-lasting “CPU” and the most important 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 game changer.

Alternative battery technologies can truly advance micro-mobility, moving the charging game from the equivalent of dial-up Internet to super-fast WiFi. 

That’s where lithium-titanate (LTO) comes in. Lithium-titanate chemistry was designed to move energy quickly and squashes charging times from hours to minutes, allowing operators to move the charging ops to the field. The chemistry fosters a far longer life span—up to 20 years—allowing micro-mobility operators to reduce the swap-and-replace cycle and helping them significantly reduce the number of battery purchases. 

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Figure 3. LTO battery chemistry tested and improved for safety and optimal performance

LTO batteries can keep e-bikes and e-scooters on the city streets for longer periods of time and safely without fire risks. Not only does this generate improved revenues and reduced downtime, but it also vastly improves the consumer experience.

Efficient, long-lasting batteries will have a far kinder impact on the environment and are better for long-term sustainability and profitability. An industry that currently has a foundation built on sand can now have a new, stronger base built upon a proven battery technology that can do so much more. It’s time to swap out old micro-mobility battery chemistries with the new. This will be the big game—or ride—changer. 

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