Scooter companies ride high on hope and hype
SAN FRANCISCO/LOS ANGELES — Segway-Ninebot Group, a Beijing-based manufacturer of electric scooters, rolled into Los Angeles this week hoping to bolster its position as the main supplier for a new wave of well-funded scooter-rental startups and offer a peek at new battery-powered transit products.
Gao Lufeng, chairman and chief executive of the firm, said the company expects to double its revenue every year for the next three to five years. Formed by the 2015 combination of China's Ninebot and U.S. transportation pioneer Segway, the company was most recently valued by private market investors at $1.5 billion and is now looking to raise $200 million from financiers, Gao told Reuters in an interview.
Gao was in Southern California for a press event trumpeting his company's new electric transportation gadgets, as Segway-Ninebot scooters become an increasingly common sight around urban areas like Los Angeles and Oakland.
But Segway-Ninebot, along with the rest of the instant industry that has popped up around scooter rentals, may have a bumpy road ahead. A host of companies are piling into the business — many spurred by euphoria around Southern California-based Bird, an app-based service for on-demand scooter rentals that is valued at $2 billion by venture capitalists less than a year after it was launched — and industry watchers wonder if it is a fad.
Investors poured $3.5 billion into scooter- and bike-rental startups globally for the first half of 2018, according to data firm CB Insights, even though basic issues such as how cities will regulate the motorized two-wheelers remain unresolved.
U.S. city regulators are capping the number of scooter companies and scooters allowed and requiring permit fees. Regulators are also grappling with scooter infrastructure — both sidewalks and bike lanes seem inadequate — and helmet laws.
"There is an enormous amount of hype around the industry and we are still seeing how sustainable the market is and how the fundamentals will play out over time," said Dan Hoffer, managing director with Autotech Ventures, which invests in mobility startups, but has not yet put money in electric scooters.