March Newsletter Spotlight: Mobility Solutions

Lime adds shared electric mopeds to the fleet - electrive.comBy Winston Minor, BPN Analyst

Disruptive technologies across mobility are paving the way for a “horses to cars”-sized revolution of the 21st century. The coming years and generations will experience sweeping technological, economic, and social change parallel to the early 20th century. At the forefront of disruption is the rapid growth of electric and autonomous vehicles, and the electrification technologies supporting them. At the same time, other mobility solutions including connectivity, shared automobiles, and e-scooter alternatives are seeing enhanced consumer adoption. Altogether, these new technologies are redefining the traditional mobility landscape of private cars, public transportation, ride-hailing services and even walking. 

 

Over the past year, BPN has paid special attention to the disruption from micro-mobility and shared vehicle solutions. Micro-mobility refers to single occupancy vehicles, such as e-scooters or dock less bikes, that operate at limited speeds over short distances. McKinsey estimates this market to be worth $300-500 billion by 2030, with geographic breakdowns shown in figure 1. Established companies Lime and Bird have realized tens of millions of users across the globe in a few short years, and are major contributors to growth forecasts for the industry. Venture Capital funds have provided billions of dollars in funding across many competitors, leading to exorbitant valuations for companies still looking to prove a means to long term profitability.

microbility market size-1
Figure 1: "Micro Mobility's 15,000 Mile Checkup", MckInsey & Company.

 

Shared mobility solutions, on the other hand, provide consumers a cheaper alternative for daily travel through easily renting personal vehicles. This alternative provides flexibility and negates the financial burden of traditional car ownership. Two leaders in the space, Getaround and Turo, have reached valuations over a billion. Their two-sided marketplace business models provide car renters long term economic advantages, and car owners the opportunity to monetize their vehicles as entrepreneurs.

Below, BPN shares two analyses in the micro and shared mobility spaces: 

 

Project Mobility Solutions: A leader in micro-mobility

 

Project Mobility Solutions is the anonymized name of a leading e-scooter company that BPN has been following and analyzing over the past year. E-scooters have seen tremendous growth in U.S. and European urban centers. As such, the most prominent trend currently impacting the space is urban government regulation. Many urban cities view micro mobility as a solution to congestion, gridlock and emissions sustainability, while others are hesitant to adopt these services due to personal safety concerns. New York and Chicago, for example, are rolling out e-scooter pilot programs in limited quantities in select burroughs. While micro-mobility solutions saw a decline in daily revenue per vehicle in 2020, long-term forecasts anticipate pandemic induced tailwinds for consumers to prefer outdoor, personal travel to public transportation. 

 

The chart below, taken from BPN’s interactive strategic model for Project Mobility Solutions, summarizes the 5-year enterprise value taken across all 100 scenarios with odds attached. An investor holding a diversified portfolio of companies similar to Project Mobility solutions might expect this return profile. These projections serve as a rough proxy for long term growth expectations in the industry. With today’s enterprise value calibrated to roughly $500 million, BPN’s scenarios over this horizon reveal a mean MOIC of 4.8x. The rainbow bands on the right correspond to odds of enterprise values at various horizons. For example, the top green band, the 90th percentile, represents that there are 10% odds of enterprise value greater than ~$6.5 billion, with two cases as high as $12 billion. At the same time, there are failure cases with enterprise values near zero. With access to the BPN feed, you can select a single case and explore the unit economics driving the growth, profitability, and scale resulting in its enterprise value.

 

Project Mobility Solutions 5 Year Enterprise Value

Figure 2: 5-year enterprise value taken from BPN’s Interactive Strategic Model for Project Mobility Solutions



Project Drive: A leader in shared mobility solutions

 

Project Drive, a leader in shared mobility and connected cars, provides one of the best alternatives for long distance trips greater than 15 miles, which comprises almost 20% of all vehicle trips in the United States. Over the past year, Project Drive has seen nearly 80% growth in its geographic footprint, with operations in over 800 cities globally. A key differentiation for Project Drive is constant innovation in product features for car owners. Its recently launched Power Host program provides insurance and account management services for hosts with two or more vehicles in their Project Drive fleet. The integration of data & analytics with fleet owners allows Project Drive to optimize connectivity with consumers. 

 

Below is a depiction of how BPN projects Project Drive’s future enterprise value at various future horizons. Each case is driven by a unique combination of unit economics and odds of differentiation that produce 100 outlooks for investors expectations at future horizons. As a leader in shared mobility and car connectivity, the outlook for Project Drive is indicative of strong industry growth in the coming years. The dotted line at the top of the yellow band represents the average enterprise value across all scenarios, ~$2.5 billion. Compared to the 50th percentile median value of $944 million, the outlook for Project Drive shows very high upside potential.

 

Project Drive 5 Year Enterprise Value

Figure 3: 5-year enterprise value taken from BPN’s Interactive Strategic Model for Project Mobility Solutions



BPN believes quantifying and attaching odds to future outlooks for growth, profitability, and scale helps investors identify which investments and industries are likely to deliver the most growth and value to their funds. If you are interested in learning more about BPN’s analysis of this space or our platform, please contact ajay@bulletpoint.network and we’ll be happy to schedule a convenient time.