After explosive growth and massive funding over the past few years, the shared mobility industry is now facing stricter regulations and higher user demands. The market is gradually saturating, making it more challenging for new entrants, and competition among existing businesses is intensifying. As the shared mobility sector enters a phase of consolidation, many companies may choose to integrate resources to improve efficiency and reduce costs to maintain a competitive edge.
On January 10th of this year, shared mobility operators Tier Mobility and Dott announced a preliminary merger agreement. The merger is still subject to approval from regulatory authorities and is expected to be completed within two months. Upon formal merger completion, it will create the largest shared mobility operator in Europe.
Corporate Changes
After the merger, the new company’s headquarters will be in Berlin, and the user application will remain available on the App Store and Google Play Store, with no change in operational scope. However, there will be adjustments to the leadership team. Tier’s co-founder and CEO, Lawrence Leuschner, will assume the role of Chairman, while Dott’s co-founder and CEO, Henri Moissinac, will become the new company’s CEO. Maxim Romain, Dott’s Chief Operating Officer, will continue as the Chief Operating Officer of the merged entity. Alex Gayer, Tier’s Chief Financial Officer, will retain his position as Chief Financial Officer.
The merger of Tier and Dott has also attracted additional funding from existing investors. Mubadala Capital and Sofina are leading a new round of financing, with both being investors in Tier and Dott. Estari, M&G, Naspers, Novator, and White Star Capital are also participating, collectively securing €60 million. However, SoftBank Vision Fund, one of Tier’s supporters, did not participate in the new funding round.
Shift in Business Focus
Previously, Tier and Dott were dedicated to expanding their operational areas. Dott is currently active in 40 cities across seven countries, boasting a fleet of 40,000 scooters and 10,000 bikes, having raised a total of €210 million through equity and debt.
Tier operates in Germany, Austria, Poland, as well as Qatar, Saudi Arabia, and the United Arab Emirates. Additionally, Tier acquired Coup, primarily offering electric moped services in Berlin, and during its Series C funding round, mentioned plans to establish a user-replaceable battery network in European cities.
Matthieu Faure of Dott stated that the company’s operational model is highly effective, achieving profitability in most cities. However, there is a shortfall in scale. The merger with Tier will allow the integration of resources from both companies, resulting in an increase in the number of operational vehicles and overall scale, enhancing profitability further. Tier currently has higher profitability than Dott, and the merged entity is expected to generate revenues exceeding €200 million.
Economies of Scale in the Sharing Industry
With intensifying market competition, large platforms can achieve higher efficiency and lower costs by integrating resources such as vehicles, technology, and user data. This economy of scale makes the integrated business more competitive, and it is a key reason for the merger between Dott and Tier.
The initial investment and operating costs in the shared mobility sector are substantial, and the development of a business relies on continually expanding its scale. Only at a certain scale can a company achieve economies of scale, leading to profitability. In the shared mobility field, the concept of network effects comes into play. As the number of users and vehicles increases, each new user adds value to the entire system, and vice versa. Therefore, as the scale increases, shared mobility platforms become more attractive, drawing in more users and investors, creating a positive feedback loop.
