&l;span style=&q;font-weight: 400&q;&g;In a related vertical, &l;/span&g;&l;a href=&q;https://qz.com/1325064/scooters-might-actually-have-good-unit-economics/&q; target=&q;_blank&q;&g;&l;span style=&q;font-weight: 400&q;&g;the unit economics&l;/span&g;&l;/a&g;&l;span style=&q;font-weight: 400&q;&g; of Bird, Lime and Spin (and electric scooters in general) have become widely discussed. Generally the economics are good, although there are some weak points. Bird originally deployed very inexpensive scooters. This was conducive to an astonishingly short break-even timeline, but ended up being moderately disastrous because the scooters fell apart rapidly from simple wear-and-tear. Rough handling worsened the equation.&l;/span&g;
&l;img class=&q;dam-image getty size-large wp-image-1134275409&q; src=&q;https://specials-images.forbesimg.com/dam/imageserve/1134275409/960x0.jpg?fit=scale&q; data-height=&q;640&q; data-width=&q;960&q;&g; Cool, I get back change for that ride?
&l;span style=&q;font-weight: 400&q;&g;But there is a sweet spot, where the scooters are economical enough to permit the capital cost of the asset to be recovered in a short period, and resilient enough for an operator to make &a;ldquo;gravy&a;rdquo;, profit that is not burdened by the initial investment. Having said all of that, it remains clear that even with relatively good unit economics, a single scooter right now only makes several dollars a day of profit. The prevailing pricing model of $1 to unlock and $0.15 per minute forms the basis of the revenues that are earned by a shared scooter business. &l;/span&g;
&l;span style=&q;font-weight: 400&q;&g;Given the so-far ruinous financial performance that ride-hailing is experiencing and the smallish daily profits currently to be expected from micro mobility operations (which would suggest that the best success would be seen at scale), why is there so much venture capital behind these mobility verticals? Do these paradigm shifts in mobility have an underlying assumption driving them forward?&l;/span&g;
&l;span style=&q;font-weight: 400&q;&g;Perhaps a way to unravel this is to give some thought to three major factors in the overall calculus that is personal mobility: public transit, private automobiles, and the younger generations.&l;/span&g;
&l;img class=&q;dam-image getty size-large wp-image-1134007048&q; src=&q;https://specials-images.forbesimg.com/dam/imageserve/1134007048/960x0.jpg?fit=scale&q; data-height=&q;640&q; data-width=&q;960&q;&g; Now THIS is a serious stretch limo.
&l;span style=&q;font-weight: 400&q;&g;Public transit is a bit of a tarnished holy grail for municipalities. Excellent public transit translates into more livable cities, which further translates into more vibrant local economies. But neither the funding side of the equation nor the quality of service side are sufficient, despite much of the world considering transit to be a critical public utility. (Relevant side note: &l;/span&g;&l;a href=&q;https://www.vox.com/2015/8/10/9118199/public-transportation-subway-buses&q; target=&q;_blank&q;&g;&l;span style=&q;font-weight: 400&q;&g;in the 1950s there was a divergence in attitudes towards transit--the U.S. stopped seeing it as a necessity, recasting public transit as welfare&l;/span&g;&l;/a&g;&l;span style=&q;font-weight: 400&q;&g;. If anything this supports demand for more mobility options in the U.S. market.)&l;/span&g;
&l;span style=&q;font-weight: 400&q;&g;Given the struggle to complete the central mission of urban transportation (&a;ldquo;door-to-door&a;rdquo; is the ultimate goal), options like ride-hailing and micro mobility have a place in the market. But there has to be more to it than that for VCs to sense a massive opportunity.&l;/span&g;
&l;span style=&q;font-weight: 400&q;&g;Consider then, the state of private automobiles. Arguably private vehicle ownership has already seen its heyday. &l;/span&g;&l;a href=&q;https://www.curbed.com/2017/5/4/15541840/parking-transportation-electric-cars-car-ownership&q; target=&q;_blank&q;&g;&l;span style=&q;font-weight: 400&q;&g;A new report predicts that ownership of private cars could fall by as much as 80% by 2030, little more than a decade away&l;/span&g;&l;/a&g;&l;span style=&q;font-weight: 400&q;&g;.This isn&a;rsquo;t going to happen overnight of course, but we&a;rsquo;re already seeing a steady downward trend in the U.S. &l;/span&g;&l;a href=&q;https://www.advisorperspectives.com/dshort/updates/2019/03/05/light-vehicle-sales-per-capita-our-latest-look-at-the-long-term-trend&q; target=&q;_blank&q;&g;&l;span style=&q;font-weight: 400&q;&g;Since the peak in 1986, there has been a 29.7% drop in auto and light truck sales per capita&l;/span&g;&l;/a&g;&l;span style=&q;font-weight: 400&q;&g;. This trend has &l;/span&g;&l;a href=&q;https://www.forbes.com/sites/johnfrazer1/2019/01/29/how-do-we-reclaim-our-communities-from-private-automobiles/#3d3a8426697b&q;&g;&l;span style=&q;font-weight: 400&q;&g;broad macro ramifications&l;/span&g;&l;/a&g;&l;span style=&q;font-weight: 400&q;&g;, but perhaps one of the most important&a;nbsp;outcomes is a micro consequence: many families who used to own a private automobile are no longer doing so. &l;/span&g;&l;a href=&q;https://www.edmunds.com/tco.html&q; target=&q;_blank&q;&g;&l;span style=&q;font-weight: 400&q;&g;We&a;rsquo;ve long understood the considerable financial burden owning a vehicle brings&l;/span&g;&l;/a&g;&l;span style=&q;font-weight: 400&q;&g;. People who give up their cars and choose to rely on alternate modes of transport suddenly have significantly more discretionary income that would have otherwise been used to service their auto debt, and pay for fuel, insurance and maintenance. &l;/span&g;
&l;span style=&q;font-weight: 400&q;&g;There&a;rsquo;s one more piece of the puzzle. VCs and long-term investors understand the maxim &a;ldquo;&l;/span&g;&l;a href=&q;http://graphics.wsj.com/2050-demographic-destiny/&q; target=&q;_blank&q;&g;&l;span style=&q;font-weight: 400&q;&g;Demographics are destiny&l;/span&g;&l;/a&g;&l;span style=&q;font-weight: 400&q;&g;.&a;rdquo; Millennials make up the largest generation in history. Their younger counterparts, Generation Z, are up-and-coming. The oldest Gen Z is around the age of 19 at the time of this writing, and thus they are about to become purchasing decision-makers. For the time being, Millennials hold considerable sway in the economy, &l;/span&g;&l;a href=&q;https://www.apta.com/resources/reportsandpublications/Documents/APTA-Millennials-and-Mobility.pdf&q; target=&q;_blank&q;&g;&l;span style=&q;font-weight: 400&q;&g;and as it turns out they much prefer having multiple mobility options over owning their own car&l;/span&g;&l;/a&g;&l;span style=&q;font-weight: 400&q;&g;. Gen Z&a;rsquo;s preferences are even &l;/span&g;&l;a href=&q;https://www.prnewswire.com/news-releases/gen-z-the-rise-of-1-8-billion-new-influencers-is-shifting-the-mobility-landscape-300658025.html&q; target=&q;_blank&q;&g;&l;span style=&q;font-weight: 400&q;&g;more stark in their decision-making&l;/span&g;&l;/a&g;&l;span style=&q;font-weight: 400&q;&g;: &a;ldquo; &l;/span&g;&l;span style=&q;font-weight: 400&q;&g;preference among the post-millennial age group for access to, &l;/span&g;&l;i&g;&l;span style=&q;font-weight: 400&q;&g;rather than ownership of&l;/span&g;&l;/i&g;&l;span style=&q;font-weight: 400&q;&g;, assets is compelling automotive manufacturers to reassess long-established strategies centered on car ownership.&a;rdquo; &l;/span&g;
&l;img class=&q;dam-image getty size-large wp-image-1049891306&q; src=&q;https://specials-images.forbesimg.com/dam/imageserve/1049891306/960x0.jpg?fit=scale&q; data-height=&q;640&q; data-width=&q;960&q;&g; Mom, could I use the scooter-bus-train-ridehail pass tonight?
&l;span style=&q;font-weight: 400&q;&g;To recap: as greater numbers of the world&a;rsquo;s population moves to urban centres, public transit becomes even more vital to municipalities, affecting their planning. The plummeting rates of private car ownership will transform our cities and unencumber families from a significant financial burden, who can then afford to pay more for new mobility options. The younger generations seem to be firmly disinclined to rely on private automobiles and prefer a rich suite of mobility choices, driving up demand. Ride-hailing may be operating at a loss right now, and electric scooters, while profitable, generate small revenue streams for the moment, but with the factors mentioned above in play, the global mobility market appears to be preparing for an upward pricing adjustment for rides, an adjustment that will ultimately be fairly easily absorbed. Suddenly, &l;a href=&q;https://dav.city/&q; target=&q;_blank&q;&g;micro mobility&l;/a&g; and ride-hailing could be generating healthy profits. Scale that up and those two verticals could be worth hundreds of billions. Innovation and competition in this&a;nbsp;space will have boundless room to thrive. Perhaps those VCs and mobility entrepreneurs are on to something.&l;/span&g;
&a;nbsp;
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