Lime shutting down in 12 markets over profitability concerns

Lime shuts services across 12 cities over profitability concern (Photo: Shutterstock)

The world’s largest on-demand e-scooter company Lime announced that it is shutting down its services across 12 markets and laying off 14% of its workforce in an attempt to turn profitable this year. 

In a blog post, Brad Bao, the CEO of Lime, explained that the company was now focused on profitability and that the company was closing service across cities where micromobility had evolved more slowly than anticipated. Those cities include Atlanta, Phoenix, San Diego and San Antonio in the U.S., Linz in Austria and seven municipalities across Latin America. 

Lime, along with rival Bird, have been some of the fastest-growing startups ever, reaching unicorn status in record time, buoyed by consumer clamor toward adopting sustainable mobility options and VC firms’ fascination in funding nearly anything that has to do with alternative mobility. 

But the writing has always been on the wall for the e-scooter companies as they aped Uber’s model of robust expansion into new markets without breaking even — hoping sustained investor interest in their business models and growth would keep them afloat until they become too big to fail. 

Everything changed when Uber announced that it would be going for its initial public offering (IPO), making it the first company in the on-demand mobility segment to be publicly traded. But even before this was realized, Uber witnessed a bloodbath in its perceived valuation, with skepticism forcing the cab-hailing giant to downscale its IPO valuation from roughly $120 billion to its eventual launching at $82.1 billion. 

This tanking of fortunes reverberated across the mobility market and hit e-scooter startups, as their likeliness to Uber’s growth story — robust expansion with no signs of profitability — was deja vu to investors, and not in a right way.  

And unlike Uber, which chose to be a cab aggregator, e-scooter startups owned all the vehicles they leased to customers, exposing them to a host of issues that rose out of vehicle ownership. The biggest issue was rough usage, leading to thousands of scooters being put out of service and costing e-scooter companies millions of dollars in repair and replacement. 

Some city streets became an ugly sight, as scooters strewn around pedestrian walkways forced municipalities to reconsider the process of providing operating licenses to e-scooter companies. What followed was a crackdown in several cities across the world, as governments quickly pulled the rug from beneath the wheels of companies, restricting the number of vehicles that could operate within city borders and mandating users to pull up scooters only in marked parking lots. 

Cases of vandalism also have resulted in hundreds of vehicles being willfully broken or chucked into ponds. To improve durability, e-scooter companies worked on building better versions of their bikes, which also burnt into their cash reserves. Batteries have also been a problem, catching fire in certain instances and consequently leading to bitter court battles. 

Lime’s recent pullout from a dozen markets is not an isolated story. Rivals like Bird, Scoot and Skip have all laid off significant portions of their employees and/or have made their way out of markets since 2019. Desperation has also led companies to look at raising ride prices. All said and done, eternal expansion without breaking even is seldom sustainable and the current slump in fortunes was a long time coming.