Since the concept of the sharing economy was introduced, it has sparked a global craze, from shared bicycles to shared cars, and now to shared electric bikes and scooters, the sharing economy has permeated every corner of life. However, with the expansion of the market and increasing competition, issues within the industry have gradually surfaced. According to overseas reports, Bird Global, a leading company in the shared electric scooter industry, is facing financial difficulties and filed for bankruptcy protection on December 20, marking the collapse of the once highly acclaimed star company.
Dependency on Financing in the Sharing Industry
Bird had once become one of the fastest startups to achieve a $1 billion valuation and went public on the New York Stock Exchange in 2021. However, as the scooter craze subsided, the overall investment enthusiasm in the sharing economy declined, leading to a sharp drop in the company’s stock price. In September of this year, the New York Stock Exchange even began the delisting process for Bird Global, causing significant negative impacts on the company’s operations and reputation.
The sharing economy is often considered a cash-burning industry due to high initial investments, operating costs, and the difficulty of achieving economies of scale in a short period. Bird completed multiple rounds of financing within a few years, facilitating rapid expansion but consistently operating at a loss. It failed to demonstrate sufficient profitability. Once funding sources tighten, it faces severe financial crises.
Additionally, high operating costs were a major factor contributing to Bird Global’s bankruptcy. Many shared products face high maintenance costs, as vehicles may be deliberately damaged, requiring significant funds for repair and replacement. The high purchase and maintenance costs of electric scooters, combined with operational and management expenses, kept Bird Global’s operating costs soaring.
In court documents submitted last month, Bird stated that the company had a net loss of $73.4 million as of September 30 this year. In the previous year, Bird reported revenue of $2.447 billion with a net loss of $3.587 billion. Bird’s rapid expansion relied heavily on financing rather than its ability to generate income. While this business model may be effective in the short term, it poses significant risks in the long run.
Changing Market Environment
While shared electric scooters were widely popular for a period, the market enthusiasm gradually cooled over time. Simultaneously, the expansion of electric scooter fleets led to an increase in the number of safety accidents, raising public concerns about the safety of electric scooters. Consequently, many U.S. cities imposed restrictions on shared scooters, controlling deployment quantities and requiring companies to pay taxes, adding significant operational pressure on Bird Global.
Intensifying Market Competition
With an increasing number of companies entering the shared electric scooter market, competition has become exceptionally fierce. In such an environment, companies must continuously invest funds in product upgrades and market promotions; otherwise, they risk being eliminated.
On the same day Bird announced bankruptcy, its competitor, the U.S. shared electric scooter brand Micromobility, was also delisted from Nasdaq due to low stock prices. Another competitor, the European shared electric scooter brand Tier Mobility, underwent its third round of layoffs this year in November. Superpedestrian, the manufacturer of LINK electric scooters, is also set to close its U.S. operations at the end of December.
Although the industry is experiencing short-term turbulence, the sharing economy still has vast development prospects. According to data, micro-mobility trips in the United States and Canada increased by 5 million compared to 2021, growing by 40% since 2018. In 2022, there were 113 million trips in the United States and 17 million in Canada. Shared mobility is becoming increasingly popular, especially electric bikes, with three-quarters of the sites in the United States and Canada expanding their fleets of electric bikes.
Bird stated that during the bankruptcy process, the company will continue to operate normally and plans to adjust its capital structure through asset sales and restructuring to expedite the profitability process. Bird Global’s current situation is a microcosm of the sharing economy industry. While the sharing economy has become part of urban life, it faces various risks and challenges due to the immaturity of its development model. Bird’s bankruptcy exposes the inherent problems within the industry, serving as a warning to other companies that need to adjust their operational strategies promptly and find more effective profit models. In the future, as technology advances and the market gradually matures, we look forward to a more perfect and stable era of the sharing economy.
