Micromobility Software: The Future of the Industry

The Future of Micromobility: A Shift in Business Models

The prevalent model of shared, dockless micromobility is facing increasing challenges. This assessment stems from recent research conducted by Puneeth Meruva, an associate at Trucks Venture Capital, who published a comprehensive brief on the subject.

Meruva posits that the current system of permit-restricted, dockless scooter-sharing is unsustainable due to high operational costs and limited profitability. He suggests the industry may undergo a significant restructuring.

Changing Consumer Behavior

“As shared services have fostered a shift in public perception, individuals are demonstrating a greater willingness to purchase their own e-bikes or e-scooters,” Meruva explained to TechCrunch.

He further elaborated that the extensive city regulations surrounding each trip could position micromobility as a valuable transportation solution for consumers, yet it hasn’t consistently demonstrated financial viability as a standalone business.

The Importance of Software

While dockless e-scooters, e-bikes, and e-mopeds continue to expand and consolidate under larger corporations, the development or acquisition of technology to optimize operations and reduce costs is crucial for achieving positive unit economics.

A frequently underestimated, yet substantial, element within the micromobility sector is the software that governs these vehicles – its ownership, in-house development, and integration with existing technological infrastructure.

Meruva anticipates that the sophistication of this software will dictate a company’s ability to transition from a rideshare model to sales or subscription services, or potentially integrate with public transportation systems.

Early Challenges and Evolution

Historically, vehicle operating systems haven’t been a primary focus for most micromobility companies. Initial priorities centered on ensuring the hardware’s reliability and preventing safety hazards.

The initial introduction of e-scooters was met with considerable disruption. Riders often disregarded safety precautions, and vehicles were frequently abandoned in inconvenient or hazardous locations.

Navigating Regulatory Hurdles

This led to significant concerns from city officials, who often labeled dockless transportation a public nuisance. However, micromobility companies were under pressure from investors eager for returns, similar to the early days of Uber and Lyft.

Faced with this situation, companies were compelled to engage with cities and seek favorable regulations to continue operations.

The Unexpected Benefit of City Regulations on Vehicle Software Development

Currently, companies offering shared, dockless vehicles are engaged in intense competition for limited city permits. As the industry shifts towards a business-to-government (B2G) approach, attempting to align with municipal demands, a surprising outcome is emerging: the creation of vehicles poised to become genuine transportation solutions, rather than simply novelties.

The latest phase of micromobility has seen the rise of companies such as Superpedestrian and Voi Technology. These firms have analyzed previous industry shortcomings and implemented strategies centered around developing proprietary onboard operating systems. This internal development aims to enhance control over rider actions and ensure adherence to local regulations.

Companies striving for market leadership are increasingly adopting vertical integration, either by developing new technologies internally or through strategic acquisitions. Lime, Bird, Superpedestrian, Spin, and Voi are all examples of companies that now design their own vehicles and create their own fleet management software and related operational tools.

Lime, for instance, develops its own firmware, which directly interacts with the vehicle’s core hardware components. This allows for precise control over elements like motor controllers, batteries, and integrated lights and locking mechanisms.

Traditionally, vehicle operating systems have often been outsourced to specialized providers like Particle and Comodule. These companies typically supply a SIM card enabling internet connectivity and GPS tracking, facilitating communication between each vehicle and the operator’s backend systems.

The operating system functions to coordinate firmware and vehicle operations, bridging firmware with vehicle applications and cloud services. It also serves as a foundational platform for building applications focused on fleet management, predictive maintenance, and optimizing battery performance and range.

According to Goss Nuzzo-Jones, Superpedestrian’s VP of software engineering, “Our scooters possess significantly more onboard capability than most others in the industry, and this is intentional.” He further explained to TechCrunch that their in-house electronic and embedded subsystems provide the adaptability to modify vehicle behavior over time, a capability enabled by their custom design and firmware development.

The Expanding Role of Vehicle Operating Systems

Superpedestrian revealed enhancements to its operating system in March, designed to refine the geofencing functionality and boost battery performance of its LINK scooters. While these improvements weren’t groundbreaking in isolation – competitors offer similar capabilities – the announcement served as a strategic communication aimed at municipalities evaluating potential scooter operators.

This release subtly positioned Superpedestrian as a leading contender for city contracts. The company highlighted its vertically integrated software, powered by the Vehicle Intelligent Safety (VIS) system.

The VIS system is a sophisticated onboard system featuring AI, 73 sensors, and five microprocessors, capable of self-diagnosis and correction. This complex technology provides a competitive advantage over larger companies and unlocks potential new revenue streams.

Benefits of a Vertically Integrated System

It is anticipated that the VIS system will reduce costs associated with servicing and maintenance. Furthermore, a robust and proprietary platform facilitates rapid scaling. New software applications can be readily added to the OS as innovative concepts emerge.

According to Meruva, speaking with TechCrunch, “A vehicle operating system functions as a platform with numerous potential applications, transforming these vehicles beyond simple transportation.”

He further explained that this platform enables the integration of features such as regulatory compliance, advanced driver-assistance systems (ADAS) for safety, and enhanced mapping content. The ability to actively develop and deploy new applications directly on the vehicle, without requiring factory recalls, is a key benefit.

• Geofencing improvements enhance control over scooter operation areas.
• Battery efficiency gains extend ride times and reduce charging needs.
• VIS system provides self-diagnostic and corrective capabilities.
• Scalability is improved through rapid software updates.

The focus on the OS as a platform signifies a shift in the micromobility landscape. Companies are increasingly recognizing the value of controlling the software that powers their vehicles, enabling greater flexibility and innovation.

A Potential Divide in the Micromobility Landscape?

Individuals utilizing shared, dockless transportation options rightfully expect a safe, comfortable, and enjoyable experience. However, current realities suggest that advanced technology may be overshadowed by the fundamental aspects of size and power. Both Lime and Bird appear to be leveraging their existing networks and could potentially develop a Mobility-as-a-Service (MaaS) platform. This platform could integrate seamlessly with public transportation and ride-sharing services.

It's possible they acknowledge that the financial viability of shared micromobility isn't yet robust enough to justify substantial investment in developing a completely integrated system internally. Furthermore, the typical user may not even perceive the differences in underlying technology – their primary concern is a dependable and easily accessible service, which Lime and Bird currently deliver.

Joe Kraus, President of Lime, emphasized the importance of reliability to TechCrunch, stating, “For transportation customers, reliability is paramount.” He continued, “If individuals are considering shifting from personal vehicles to micromobility, they must be able to depend on it. We utilize demand forecasting, leveraging data from over 200 million trips, to anticipate demand fluctuations in specific locations and timeframes.”

Lime is prioritizing a customer-focused strategy, even while outsourcing some technological components. Recent announcements include features enabling new users to pay without app downloads and the elimination of vehicle reservation fees.

Spin, through its collaboration with Tortoise, is also aiming to enhance its operational effectiveness. Tortoise offers an automated repositioning system that integrates with Spin’s Internet of Things (IoT) infrastructure. This system strategically deploys scooters to areas with the highest demand, thereby boosting ridership through increased convenience. This technology is currently being tested in Boise, Idaho.

Spin proposed a pilot program featuring its S-200 scooter integrated with Tortoise technology as part of the New York e-scooter initiative, but was not selected for the Bronx pilot program.

While widespread accessibility with a user-friendly product is valuable, it may not be sufficient to sustain the dockless model long-term. Many remain hopeful that industry consolidation will ultimately lead to profitability. Regardless of one’s perspective, it is reasonable to anticipate that Lime, Bird, and Spin will explore developing their own operating systems for the vehicles, particularly if they expand into ownership or subscription-based models.

As Meruva noted, “Vehicle performance significantly impacts the user experience when the consumer owns or subscribes to the vehicle.”

The reliance on external technology impacts not only vehicle performance but also a company’s profitability. For instance, Voi and Spin are evaluating computer vision technology to detect lane departures, parking zones, and pedestrians. However, depending on external vendors for these features reduces already tight profit margins. Streamlining these services, creating new revenue streams, or partnering with public transit systems would be logical next steps.

Alternatively, companies might adopt a combination of these strategies, mirroring each other’s technological advancements to diversify their offerings and maintain competitiveness. Ultimately, software development will be a key indicator of the industry’s future direction. Scooter designs can only be refined so much, and electric motors have inherent speed limitations. Industry observers have frequently likened e-scooters to “iPhones on wheels.” While they haven’t fully reached that level of integration yet, that potential remains.