Spin, a company that operates electric bikes and scooters in 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 Ford-owned micro-mobility firm sent a clear message to global city leaders: 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.
These limited permits prove to be beneficial for scooter companies as they allow them to manage demand and supply. Bear says that if many e-scooter vendors are allowed to enter a market, it creates an “uncertain operating environment” and “race for the bottom pricing.”
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. The company’s leadership claims that the decision to leave open market cities will allow the company to focus its resources in cities where it has a strong presence, which is the best way to grow.
” In an industry as young as micro-mobility there must be a mutually benefit partnership between cities and private businesses,” a Spin representative stated in an email 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. It is often not worth competing with other companies to rent scooters in these areas. However, a competitive permitting process that limits the number of players in a town helps to even out the supply.
“What we’ve learned is that we cannot invest in cities in a way that is profitable unless we have limited or exclu