On the Origin of Scooters

By Michal Naka and Stephen Lambe

“We’re building a custom micromobility vehicle and raised more money.” Sound familiar? Micromobility operator announcements have been converging lately. But what does “custom” really mean? Not all are created equal, and an evolution in hardware strategy is underway.

We propose lightweight electric vehicles, like e-scooters and e-bikes, can be divided into three categories⁠⁠: Commercial off the shelf, Configurable, and Custom. Each has its advantages, which may explain why all three continue to be pursued by operators.

To select an optimal hardware strategy, a micromobility operator should consider the relative priority of three major focus areas: operations, hardware, and growth. If hardware ranks first, then invest in Custom vehicles. If operations are most important, then Configurable may be the wisest strategy. The company’s ops team can apply their experience to improve the vehicles, but without major hardware development investments. Lastly, if growth is the priority, then Commercial off-the-shelf will enable the company to leverage existing mass-produced vehicles and expand rapidly.

Note: This is not a comprehensive list. Companies may fit into multiple categories. Feedback welcome.

Commercial off the shelf (COTS) is straightforward – buying a vehicle already in existence and generally available directly to consumers. The Ninebot M365 and ES4 exemplify the category. They were both originally designed for consumers and then adapted for fleet use. The Segway Max serves as a more recent example, announced last winter and purchased by Spin and Lyft. The advantage of a Commercial off the shelf strategy is focus. An operator can specialize in other critical areas like operations or business model innovation while leaving its hardware program in the hands of an experienced partner.

The Segway Max (left) and its Spin (center) and Lyft (right) versions

The primary disadvantages are limited control and the building to the lowest common denominator. An operator is limited in what they can fine-tune on the vehicle platform. Is the battery monitoring system sending too many false-positive errors? You’re out of luck unless you can convince the manufacturer to update it.

For a Commercial off the shelf manufacturer, they must make a scooter that’s attractive to very diverse customers- from Mexico City to Berlin. That means first attempting to understand customer needs when separated by thousands of miles. Then one must build a scooter that can fit into all these operators and business models rather than tailored to any of them. As diversity has increased, so has the pressure on this “one size fits all” approach.

Configurable vehicles are the middle ground- built by an existing vehicle manufacturer, but with design input from an operator. These are not available directly to consumers, but similar-looking models may be. Tier’s Okai ES-200 scooter and its close cousin, the consumer edition Electisan F-350, illustrate this. In fact, Electisan/Okai has emerged as a key player in this category- having built scooters for JUMP, Lime, Tier, and Bird. This approach has several advantages: light customization without major R&D costs, and decently fast production times since the manufacturer is generally already mass-producing the bulk of the vehicle’s systems. The disadvantage is similar to off the shelf scooters- limited control of the vehicle’s systems, dependent on what the manufacturer allows.

Stem close-up of Bird’s BirdZero, with a nod to its manufacturer

Custom scooters are well described by Lime’s Joe Kraus on Recode Decode.

We have a team of 70 people in China that design the vehicle, that source all the components, that basically do all the engineering. Then we work with three assemblers that take that design and create it on an exclusive basis.

Fully custom scooters incorporate the hard lessons learned by micromobility operators and are optimized for the operator’s unique workflows. This means design choices like integrated locks to comply with city regulations and subassembly modularity to enable efficient maintenance rebuild operations.

To appreciate the highly specialized team that must be hired to build custom hardware, consider some of Bird’s job postings for its 100-person Vehicle Engineering team: Battery Engineer, Motor Controls Engineer, Strategic Sourcing Managers in Taiwan, Vietnam and Malaysia, Embedded Software Engineer. Bird’s Travis VanderZanden explained why they make these investments.

It might not be noticeable yet, but over the course of 6–12 months, people are going to see a big delta in the hardware that’s out there. We have certainly invested heavily…We are looking at very fast pace of iteration and a big competitive advantage for Bird. (source: The Family)

Beyond internal advantages, the Custom strategy opens the door to pursuing the “First-and-Best Customer” approach that Stratechery’s Ben Thompson laid out after Amazon’s Whole Foods acquisition.

This is the key to understanding the purchase of Whole Foods: from the outside it may seem that Amazon is buying a retailer. The truth, though, is that Amazon is buying a customer — the first-and-best customer that will instantly bring its grocery efforts to scale.

Applied to scooters, a Custom hardware strategy investment means a company’s shared business become their ‘First-and-Best Customer’, helping them get to scale with their vehicle development. What follows are experiments in new business models, like selling scooters directly to consumers or a platform approach.

One might conclude Custom is the best option for everyone. It’s not that simple. According to The Information, Lime encountered multiple unforeseen problems with their custom Gen 3 scooter after launching it in late 2018. Everything from a malfunctioning LED screen to time-consuming brake repairs. As a result, they significantly delayed its rollout.

Lime’s Gen 3 scooter

With fully custom vehicles, the stakes are high and such errors expensive. A manufacturing partner would expect a large upfront commitment before starting production, as they would be dedicating assembly lines to the custom vehicle.

The push to find exclusive manufacturing partners also has led to interesting pairings. Bird is contracting with Radio Flyer (yes, the red wagon folks) to manufacture its Bird One scooter. That’s not as random as it might seem- Radio Flyer now also makes a kid-size Tesla driveable car. No word on its Autopilot capabilities.

Unlike the earliest days of micromobility, hardware strategy cannot be taken lightly. It can either accelerate a company’s success or quickly drain resources if not in sync with other priorities. Stay tuned as we keep exploring this emerging ecosystem.

Thanks to @VictorPontis, @OliverBruce, @AsherDeMontreal, @TurnerNovak and @dcliem for the feedback.

All views expressed are the authors’ own.

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