Strategy Report: eScooter brand & sustainablility as a brand postionning

1. CONTEXT

With the climate criss well underway, it’s no surprise that 85% of consumers are interested in reducing their carbon footprint. Germany aims to be greenhouse gas neutral by 2045, but to date, emissions are stagnating at the 1990 level - while governments and companies have implemented more green measures, the higher number of consumers offsets any carbon savings. In order to remain within 1.5 degrees of climate change, individual consumers should aim for a carbon footprint of less than 2.1 tonnes - however, the current average in Germany is 10.7t. What can we do, and how will we do it?

Transport

Transport is a key service almost all of use on a regular basis. However, transport is responsible for over one quarter of greenhouse gas emissions in the EU, with 84 per cent of that coming from road transport alone. Road traffic in urban areas generates 10% of all CO2 emissions in the bloc.

In Germany specifically, transport is responsible for around 20% of carbon emissions. Berlin’s transport sector is responsible for roughly one quarter of the city’s total c02 emissions,standing at 4.8 million tonnes per year. Germany has committed to ambitious targets, aiming to reducing transport emissions by 48% by 2030. Reducing emissions so significantly is not only a challenge, but indeed an opportunity for innovators and green companies to disrupt the way we live, move and work.

Investment in public transport is growing, and personal transport faces an uncertain future. Germany has passed a Fuel Emissions Trading Act, which means higher operating costs for businesses in the heating oil, natural gas, petrol and diesel. This results in higher consumer prices, and a likely turn away from cars. These higher operating costs will be reflected in consumer prices. Carbon neutral solutions will be a game changer. With 85% of consumers eager to reduce their personal carbon footprint, it looks like eco friendly micro mobility is poised to disrupt the personal transport market.

2. SCOOTERS AS THE SOLUTION

In June 2019, the German government passed the “Elektrokleinstfahrzeuge-Verordnung”, a rule allowing the use of scooters in cities. Since then, Berlin has become one of the top 3 cities in terms of scooter use. Micro Mobility is expected to grow 500 billion in next years .

The sharing economy and asset light lifestyles mean people have less desire to own, and more interest in rental, no-maintenance models. Aside from freeing themselves from the burdens of ownership (what if my scooter gets stolen? How do I repair it? Where to store it?), consumers may use scooters to avoid crowded public transport during a pandemic, or simply reach underserved or nearby, “last mile” destinations more quickly. On the other hand, critics say the scooters are unsafe to use, clutter sidewalks, exclude disabled people, and are too expensive or inconvenient to use (for example, lack of scooters in the desired area).

Current Market

Demand is significant, and the competition is fierce. Numerous startups vie for their share of this growing market. The major players are Tier, Bird, Bolt, Spin, Lime, & Voi.

Studies have shown scooters are most popular in central business districts and tourist areas, with a high density of consumers. “City East” is particularly frequented (src). Scooter use is highest on the weekend and in the evening, and the average scooter journey is 1.7 to 1.9km. (could calculate some stats on carbon footprint here?) Although scooter use can be seasonal and weather dependent, the average scooter in Berlin makes around 3 journeys per day. The high saturation of scooter brands on the market may account for the relatively low number compared to other EU cities.

However, scooter startups face indirect competition in the form of the extensive public transport network, which moves over 900 million passengers a year. Germans make 6.5 times as many public transport trips per year as Americans. While the public transport system seems to have cornered medium and long distance transit, there is ample market for escooters and other rmicrombility solutions to help people make those short, last mile journeys.

3. ESCOOTERS & CARBON FOOTPRINT

Scooters help reduce your carbon footprint

Crucially, scooters allow consumers to travel independently to specific destinations (unlike public transport routes), with a far lower environmental impact than cars. Scooters generate only about 1-2% of the carbon generated by a car going the same distance, and their small size means they can be “parked” far more conveniently.

Especially for short commutes or last-mile journeys, consumers can greatly reduce their carbon footprint by taking a scooter instead of driving. As scooters are so much smaller than cars, their fuel use is far more efficient. Scooters generate 3.5 grammes of c02 per km, where a small electric car emits 65 grammes!

The Paris climate agreement targets global per capita CO2 emissions of 2,300kgs per person to keep global warming below 2 degrees. Assuming a person allocates 20% of their allowance to transportation, this means we need to keep our individual transport carbon footprint under 460 kgs per year.

While long haul flights and personal cars attract a lot of criticism, short trips also generate significant emissions, especially when there is a high volume of them.

The Numbers

Despite some initial hiccups, scooters seem to be the most eco friendly way to make those short urban journeys. Doing 2,000km a year on an electric scooter results in 87 kgs of CO2 or just 3.7% of your Paris Budget. To put it in perspective, the carbon footprint generated during a 5km trip (17.5grammes) on an electric scooter is actually slightly less than that of cup of black coffee (21grammes), and equivalent to 2.5 google searches. A large latte generates as much carbon as 20 escooter trips of 5 km each.

Let’s not get started on other consumer goods - just producing one pair of men’s running shoes generates as many emissions as 3 people commuting on scooters for a year! (how far are we guessing they commute?) As well as all this, Escooters further help consumers make more sustainable choices in that they rent or share scooters rather than buy. However, it’s important to understand the whole process and determine how companies can make the entire lifecycle as carbon neutral as possible.

The Full Lifecycle

North Carolina State University conducted a life-cycle assessment on escooters in the USA and found some areas of concern. However, with so much investment and innovation in the segment, it seems these weaknesses should be seen as opportunities for improvement and differentiation rather than setbacks.

• Production: Most scooters are made of aluminium, which is energy intensive to mine and extract. However, it is easy to recycle, and recycled aluminium has a carbon footprint 95% lower than its brand-new counterpart. Steel can also be recycled, carbon fibre should be avoided.

• Supply Chain: Transporting the scooters from factories (often in China) to Europe comes with a carbon footprint of its own. However, it must be remembered that the number of scooters which can be transported in one flight makes their individual unit carbon footprint far lower than that of cars.

• Use: Scooter’s short lifespans generate around 50% of the emissions. The average scooter is only used for one month. The high number of users means more wear and tear, and parking scooters out in the open means they are at the mercy of bad weather, vandalism, and theft.

• Maintenance (43% of emissions in some brand cases). Using diesel trucks or cars to collect and bring to a recharge point generates high C02. Swappable batteries which can be changed onsite rather than at a charging point are proposed as a solution - however purchasing new, difficult-to-recycle lithium-ion batteries comes with its own environmental implications. Transporting more scooters at once is also important.

• Electricity use: The environmental impact of the electricity used to charge scooters is small at around 5% of the overall impact. Using renewable energy is a practical solution which appeals to consumers.

4. Strategic Opportunities

Although scooters are far more ecofriendly than flights or driving, it is unlikely they can replace them on these long-haul trips any time soon. Instead, marketing should focus on the micro market, particularly to eco conscious urban consumers with disposable income. Emphasise “the last mile”, and how much more eco friendly and convenient a scooter is in this case.

A scooter brand should look at consumer’s main pain points and position themselves as the solution - with an added, value-adding eco-friendly benefit. This is a useful differentiation strategy in the already crowded market.

Renewable energy: Renewable energy, solar, charge onsite rather than at plant. Using renewable energy to power scooters is significantly more efficient than charging off the local grid - and adds some feel-good feeling for eco conscious consumers. The German electricity grid is estimated to generate 346 grammes of c02/kWh

Local supply chain: Companies could consider assembling scooters in country. This creates a “home turf” advantage, and creates brand awareness and loyalty, as well as saving on transport costs.

Safety: Many critics believe scooters are unsafe. The unstable frame means riders could easily fall or slide off when turning a corner or riding on wet surfaces - 1500 scooter riders injured themselves or others in the USA last year.. Companies should innovate and design more stable scooters, offering something extra for concerned or on-the-fence riders.

Durability: The short lifespan of scooters is a major cause for concern from both environmental and financial perspectives. Designers should use aluminum and recyclable materials, provided they are durable enough to survive the local climate and reasonable wear-and-tear.

Given the relatively new and fledgling nature of the scooter market, there is an opportunity to establish a position of authority on the important role escooters could play in reducing CO2 emissions. A large marketing campaign and partnerships are well worth exploring.

Local authorities: Scooter companies benefit when cycling infrastructure is increased, as more people will be likely to try out their product. For this reason, scooter companies should become a strategic partner with Cities, Towns, Regions, & Countries to encourage people to move away from cars, and achieve their CO2 targets.

Targeting consumers: Strategic Partnerships with leading carbon efficient brands like Allbirds could help appeal to the target customer.