Scooters Help Europeans Dodge the Sweat After Launch in Germany

(Bloomberg) -- E-scooters have only been legal in Germany for a matter of days, but public curiosity -- as well as a Continental heatwave -- has already made them a common sight in many cities.

Lawrence Leuschner, chief executive officer of one of Europe’s biggest e-scooter providers, Tier Mobility, said the app required to locate and unlock a Tier scooter was downloaded hundreds of thousands of times in Germany during the first four days. Users in the country made a collective 300,000 kilometers of journeys on Tier scooters in that time, he said.

“It helped us pass the three-million total worldwide rides milestone on Thursday,” he said in an interview. "We launched in 32 cities and we are profitable in our core markets, which have 90% of our fleet."

Germany’s decision to legalize e-scooters last week came as Europeans fought to stay cool as a blast of hot air from the Sahara desert caused record temperatures in large parts of the continent. The country imposed speed restrictions on usually limit-free stretches of its highway network.

Rather than deterring riders, the scorching temperature actually made the newly-legal scooters more attractive than some other forms of transport. Andreas Katzig, who rode one for the first time on Thursday in Munich, said that “compared to a bike, you’re not sweating. That’s a huge advantage in the summertime.”

Katharina Rzepucha, also in Munich, said scooters are an alternative to running than public transport. “If I see something that’s a kilometer away, and I don’t want to run there, this is way better,’’ she said.

Tier’s app overtook Facebook Inc.’s WhatsApp and Instagram, as well as Google Maps, YouTube, Spotify, Amazon, and Netflix, to become the most popular download in Apple’s German iOS app store this week, according to the iPhone-maker’s official charts.

U.S. e-scooter giant Lime also broke into the top 10. Sweden’s Voi Technology AB, and Berlin-based Circ, launched in Germany this month as well.

Demand for e-scooters in cities worldwide have helped the industry’s biggest players, such as Bird Rides Inc. and Lime, achieve multi-billion-dollar valuations in less than two years. Barclays analysts Kristina Church, Ryan Preclaw, and Ben McSkelly, wrote in a March report that “even at current cost per mile, we estimate an $800 billion revenue opportunity for micromobility operators in the near term. The addressable market could rise substantially.”

However, no company has said it’s actually profitable. Deploying, replacing, and increasingly now designing scooters from scratch, involved enormous capital expenditure costs. The low cost of using a scooter, combined with copycat businesses springing up in quick succession, hasn’t made it easy for companies or investors to recoup early spending.

The popularity of the U.S.-based frontrunners, fueled by the projected value of being a future market leader, caused a surge of companies to spring up in Europe over the past year. Bloomberg reported in February that Voi had held early-stage talks with Tier about a possible merger in order to remain competitive, but both remained independent and pursued fresh funding instead.

Voi announced a $30 million round in March and launched its German operation earlier this month as well. Tier’s Leuschner said he was in the process of raising a new round of funding from venture capital firms, but declined to comment on how much he was looking to raise or at what valuation. “It’s going well though,” he said.

Europe’s scooter companies are small compared to their U.S. rivals, with Bird reportedly already notching 1.8 million rides in Nashville alone. And some of Europe’s other leading economies still don’t have laws that permit the use of e-scooters. In the U.K., the lack of guidelines prompted the British government in May to open “the biggest regulatory review in a generation” of current legislation, some of which dates back to 1835.

Another problem is also looming: Europe’s changing weather. "I would use it in the autumn as well," said Katzig. "Maybe not in the winter, I don’t know how they perform on ice and snow."

Ben and James, two English tourists using scooters for the first time in Berlin, added that, if it were raining, "we probably wouldn’t be using them." There are about 120 days a year where it rains in Berlin, according to weather reports.

For now, the heatwave is continuing, and several people have been stopped by police for stripping in public. “I haven’t heard of anyone riding our scooters naked though yet,” Tier’s Leuschner said.

--With assistance from Sarah Syed.

To contact the reporters on this story: Nate Lanxon in London at nlanxon@bloomberg.net;Oliver Sachgau in Munich at osachgau@bloomberg.net

To contact the editors responsible for this story: Giles Turner at gturner35@bloomberg.net, Andrew Blackman

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