Mobility mixed fortunes

There was an announcement this morning from Free2Move, the mobility brand of Stellantis, that they were going to buy Share Now, the European market leader.  It is a joint venture into which BMW and Daimler put their car-sharing businesses in 2018 in response to the challenges they faced with their respective operations at that time.  The two German premium brands had entered the mobility market in 2008 and 2011 partly to address the hype at the time around the death of car ownership, and high expectations were set of future growth.

Indeed, we did see growth, with operations launched around the world, including in China and the US, but profits proved elusive, and they sought to cut costs by combining the two businesses, then exiting the US market in 2019.  The pandemic dealt a further blow to all mobility businesses, as travel reduced and customers decided they did not want to use a car that had just been used by someone else.  As Mercedes has already transferred the smart brand into a new joint venture with Geely, and announced that they will exit unprofitable product segments (i.e. small cars), with BMW potentially following a similar direction, the opportunity to sell smaller cars suitable for urban use into the mobility business has also reduced.

The financial details of the deal have not been announced, but reports talk of anywhere between €100 and €400 million for a business that was rumoured to be incurring annual losses of €200 million.  The latter is highly dependent on the commercial terms struck between the parent companies and Share Now for the supply and remarketing of cars, but if true, then a transaction value at the lower end of the estimates seems likely.  This is a business that the shareholders would probably have closed if they could not find a buyer.

In parallel, Volkswagen Group is in the process of acquiring Europcar, one of the leading daily rental players, Toyota is proceeding with the roll-out of their Kinto mobility offer which includes daily rental and car-sharing, Kia has a global ‘Plan S’ strategy to expand their mobility offering, but on the other hand Ford has dropped its Chariot ride-sharing service.  Against this mixed background, Stellantis has made a very clear and public commitment to mobility services as part of their overall strategy – even more impressive given the huge list of items on the ‘to do’ list barely a year after the group was formed.

Revenues for Free2Move were a modest €40 million in 2021, but the ambition is for €700 million by 2025 and €2.8 billion in 2030, with 15 million active users globally.  At face value, this does not look to be very realistic given the mixed experiences of others – including BMW and Daimler.  However, as is often the case, the devil is in the detail.  Free2Move do not in reality have much choice in the matter given the legislative timetable, but their plan is for their European fleet to be 100% electric by 2030, and in the US five years later.  To support this, alongside parking and other forms of vehicle rental and subscription, Free2Move includes electric vehicle charging as one of the subscription services, which it appears will be supplied through a further JV between them and Engie EPS, Free2Move eSolutions.  Engie in turn is a player in power storage and recharging infrastructure, and was acquired after the formation of the eSolutions JV by a Taiwanese conglomerate, TCC, one of the largest industrial groups in Asia with interests in renewable energy and energy storage.

The end result is that we are looking at a very different business to that previously offered by Share Now, or on offer today from the other players – whether OEM-owned or independent.  It will support the roll-out of BEVs from the Stellantis brands into a wide range of mobility offers from cars by the kilometre to longer term subscriptions, and access to other forms of transportation through the customer app.  It will also extend the relationship between Stellantis and those of their customers who choose to buy or lease their BEVs to cover the services they need on a day to day basis – definitely charging, and potentially domestic energy storage and generation.  The combined offer is a combination of what Share Now previously offered, with what VW will acquire through Europcar and what Tesla offers through their Supercharger network, Powerwall and Solar Roof products.

In that context, €2.8 billion revenue from 15 million active users in ten years’ time possibly isn’t so unrealistic after all…?