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Lime Just Became the Biggest Micromobility Company in the World

11:36 AM PDT on May 11, 2020

In case you missed it, scooter giant Lime has acquired Uber's Jump bikes and scooters β€” and gotten Uber to foot the bill. The move could pave the way for a future where Lime is a reliable and vital fixture in our post COVID-19 transportation networks β€” or make the whole micromobility industry more fragile.

Let's unpack the only-in-the-tech-world deal: Lime's acquisition of Jump occurred as part of a $170-million investment in Lime, partly led by Uber, which already owned a small part of Lime (even though Lime was a competitor of Uber's Jump the whole time). The latest deal also allows allows Uber to buy Lime in 2022, if it wants.

Until Thursday, Lime was arguably tied for the title of the largest scooter start-up in operation today with the other big guy, Bird. But during Thursday's funding round, the e-taxi company increased its financial commitment to the company, then sweetened the deal by throwing in Jump's operational assets on top of the cash β€” essentially taking itself out of competition with its investee/former rival, now the largest micromobility outfit in the world. Consumers will soon be able to take Jump bikes and scooters on the Lime app, and Lime scooters on the Uber app.

The news was a welcome financial relief to Lime, which, like many transportation companies, has struggled during the pandemic. The micromobility giant made an early decision to pull its fleets in nearly every country in an attempt to safeguard the safety of its workers and discourage unnecessary travel that could spread COVID-19 β€” a move that drew criticism from some advocates, since many smaller micromobility companies remained in operation to provide a sustainable solo transportation option for essential workers. Whether Lime made the right call is open for debate, but it certainly kneecapped the company's revenues; the company laid off 13 percent of its staff last week, and its valuation dropped by a reported 79 percent (based on the numbers in the latest funding round).

But as COVID-19 lockdowns slowly begin to ease around the world β€” and Lime scooters return to the roads β€” the company is observing early signs of what could prove to be a global surge in ridership.

In South Korea, which has done a famously good job of containing the virus and speeding a return to normal life, riders are using Lime 14 percent more than they did before the pandemic. Users in Columbus, Ohio. and Oklahoma City are taking substantially longer trips than they did before β€” which could indicate that scooters are replacing bus and train commutes among residents who no longer feel safe taking public transportation.

"We're no longer just a first- and last-mile solution," said Russell Murphy, a spokesman for the company.

Why Uber is betting on Lime

It's a good bet that Uber, which has experienced staggering losses and layoffs of its own, took notice of Lime's promising ridership trends before it made its offer β€” and weighed them against the bleak outlook for its core product in a post COVID-19 world. As many former transit commuters return to work, Americans are undoubtedly hunting for ways to get around that both limit their exposure to COVID-19 and are affordable for everyday travel β€” and the e-taxi giant's business model just isn't a good option for workers who are pinching pennies.

For instance: a four-mile commute on a Lime scooter will cost a rider about $3.75, leaving a little wiggle room for slowdowns at stop signs β€” a little more expensive than the average one-way train fare in a major city. The cost of a four-mile ride in an Uber varies wildly, but since the service averages about $2 a mile before tip, it's safe to say that an $8-plus taxi to work each way is not sustainable for most workers β€” especially those that can't afford to shell out a huge sum up front for a private car.

Another factor: Jump was losing Uber money prior to COVID-19, and the company needed to offload a liability to weather the pandemic. Lime, which was on track to be profitable in nearly all of its markets prior to the pandemic, is betting that it can use its wealth of experience in making the notoriously challenging scooter market profitable to turn Jump into an asset.

The downsides and upsides of a consolidated micromoblity world

But some advocates fear that the merger may not be total win/win β€” if the micromobility giants ever leave riders stranded again, as they did in the early days of COVID-19.

The trouble with private microtransit is, and always has been, simply, that it's private β€” which means that at the end of the day, micromobility companies don't have the same obligations to the cities they partner with as a publicly funded transit system. Though bus and train networks have cut back on service frequency and trimmed back routes during the pandemic, Streetsblog has yet to hear of an MTA pulling its vehicles altogether, as Lime did. The newly souped-up, consolidated Lime/Jump dream team, theoretically, could do that at any time it sees fit, if shareholders were unhappy with the returns in a given market β€” and consolidated micromobility sector means that there will be fewer small outfits left on the street if the big guys make that fateful choice again.

But smaller scooter start ups are vulnerable, too β€” as evidenced by the churn of small scooter companies that have entered and exited the market almost as quickly as they came. It could be argued that cities would be better off betting on a big player with a resilient business model that's found ways to weather tough times β€” especially since public transportation networks have, so far, been reluctant to get into the scooter game themselves.

"We are hearing from city after city that they are ready to embrace micromobility β€” scooters, bikes and other modes β€” but they want to be confident that the partner they pick is stable enough to serve them for many years to come," said David Spielfogel, chief policy officer at Lime. "They're hyper-focused on the viability and durability of their micromobility partner. This new funding gives us the resources we need not just to weather COVID-19, but to be that strong partner cities need long term β€” and give residents an alternative to driving."

Time will tell if Lime will be that long term partner, but our goal should be clear: to make sure that American residents have the micromobility options they'll need during the post COVID-19 era, so we don't end up in a world with even more driving. If this acquisition helps Lime weather the crisis, it could be a watershed moment for the entire industry.

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