🚲 Su$tainable Mobility, Volume 11 💰
This newsletter aims to separate the signal from the noise for making money in all things sustainable transportation: Electrification, mode shift, active and public transit, and mobility aggregation, across both people and goods movement.
Su$tainable Mobility will be taking a break for 3 weeks in October due to travel. I will be organizing some mobility meetups in Paris (Oct 20) and Brussels (Oct 21). Send me a message if you want to join us!
This week, we have a Deep Dive on how ridehail companies are pivoting.
Disclaimer: This newsletter represents my own thoughts and not those of any employer. I will always disclose when I have a financial relationship with a company cited.
QUICK HITS: Fast takes on notable news from last week
🏭 Ford announced an $11 billion EV manufacturing expansion for North America. The United Auto Workers (UAW) and the state of Michigan both raised eyebrows about the choice of Tennessee and Kentucky.
🏦 The Federal Reserve Bank of New York published its first model for climate stress tests of banks. There’s no direct policy or economic outcome yet, but the Fed will gradually begin to more formally incorporate such stress tests, with exposure to the oil and gas industry being a key risk factor.
💰Rivian’s S-1 is live. More to come in a Deep Dive. Most OEMs are intrinsically bound to their place of origin: VW/Wolfsburg, GM/Detroit, Tesla/Silicon Valley, Toyota/Toyota City, etc. Rivian may be the first distributed OEM. It could have conceivably said its headquarters was Plymouth (Michigan), Normal (Illinois), Palo Alto (California), or Irvine (California). Ultimately Irvine won. That’s another boost for Southern California’s claim to EV leadership in the US.
🚕 Carnegie Mellon researchers released a study on the downsides of ridehail. Versus private car driving, ridehail has more external costs in the way of fuel consumption (deadheading), congestion (pick-up and drop-off), and crashes. Lots of studies have confirmed the downsides of ridehail, but we still need to determine at what point we accept the worse per-ride impact of ridehail if and when it contributes to an overall car-free (or car-light) individual lifestyle.
🚲 Bond Mobility entered bankruptcy. Denso led Bond’s $20M series A in 2019. It’s a reminder of how tough some shared mobility operations are and how long the road to sector profitability might be.
⛽️ India’s state-owned refinery is being privatized…and investing in renewables. This is a great example of a player in the downstream space including renewables in their growth plans. Plans include having retail fuel stations offer both EV charging and hydrogen.
🤖 California will require any light-duty autonomous vehicle to be zero-emissions in 2030. Some players currently use plug-in hybrid solutions, but there were zero viable business plans for anything but fully zero-emissions powertrain for light-duty autonomous vehicles by 2030. Still, not a bad legal backstop to have.
💥Teenager hits six cyclists but isn’t arrested, in a reflection of toxic car culture. While a more extreme example, this Texas incident shows just how dangerous the road can be for those not in passenger vehicles. Eagle-eyed friend of the newsletter Nisha Desai points out that the visible pollutants coming from the tailpipes of the various trucks in the video are almost certainly an aftermarket modification, not the original factory settings.
STARTUP WATCH: Sustainable mobility startups (generally pre-seed or seed) to keep an eye on
👩💻 Adiona (Australia): Fleet management route planning software for medium- and heavy-duty fleets
💧Alchemr (Florida, USA): Water electrolyzers for green hydrogen
💻 Dashboard Story (California, USA): B2B SaaS product ("Duet") to help fleet operators improve vehicle utilization
🔌 Exponent Energy (India): EV charging focused business from former Ather Energy Chief Product Officer
🚗 Joulez (New York, USA): EV car rental operator
DEEP DIVE: Ridehail companies are pivoting
In 2015, Uber co-founder Travis Kalanick claimed his company would mean “Fewer cars, less congestion, more parking, less pollution and creating thousands of jobs.”
While Uber didn’t invent peer-to-peer ridehail, it did perfect the model of building conviction that network effects would create a winner-take-all (or most), highly profitable global business. Thus began a global arms race, with Uber raising massive amounts from Softbank and others to expand domestically and internationally.
A handful of companies developed enough of a moat that Uber couldn’t muscle them out of certain markets. Each of them became tech darlings in their own right, even if Uber occasionally took minority equity stakes in them as consolation prizes. Most notably:
Lyft in North America
Didi in China (and later in Australia and Latin America)
Ola in India (and select other markets such as the UK and Australia)
Grab and Gojek in Southeast Asia
Yandex in Russia
Bolt in Europe (and later in Africa and the Middle East)
Cabify in Spain, Portugal, and Latin America
Along the way, we learned that ridehail isn’t the urban panacea Kalanick promised, especially in a COVID reality where actual pooled rides are less realistic. But, as noted above, it can be a helpful tool if and when it reduces private car ownership. And we also learned that the ridehailing business isn’t the massively profitable business many thought it would be. A decade after starting operations, Uber’s ridehailing business is still inching towards real profitability.
What’s interesting from a sustainability perspective is how each of the ridehail giants has had to modify their business with an eye on profitability and addressing environmental concerns:
Uber invested massively in food delivery (including buying Postmates) while offloading e-scooter and bike operations to Lime
Lyft eschewed food delivery and instead dabbled in shared bikes and e-scooters
Didi added numerous other delivery services and announced a JV with BYD to build cars custom-designed for ridehail
Ola created a ground-up electric 2 wheeler manufacturing business, which has been spun off as a separate entity now worth over $3 billion
Grab and Gojek both invested heavily in digital payments and became super- app powerhouses
Yandex doubled down on developing autonomous taxis
Bolt invested heavily in operating e-scooter networks, as well as food delivery
Cabify built a shared e-bike and e-scooter network and added car sharing options
In short, a divergent array of reactions to reach profitable, sustainable growth. Time will tell which ones were astute and which ones were foolish.