On-Demand Ridepooling Market Size
Over the past year or so I have shared my findings and take-aways on the genesis, evolution and outlook of the On-Demand Ridepooling market here on Medium or on LinkedIn on a quarterly basis. In my reports I examine new project launches, fleet sizes, project statuses, business models, geographic market characteristics and supplier market activities, all of which this article will provide for Q3 2021. Additionally for this report I decided to also take a look at the market volume from a monetary perspective.
But let’s start with the overall market development.
Q3 2021: A record-breaking quarter
The On-Demand Ridepooling market has been growing enormously over the last years. As of writing this article, over 620 On-Demand Ridepooling services have been deployed globally of which over 450 are currently running.
Growth has been strong and steady over the last quarters and Q3 2021 continued this trend by being the strongest quarter ever with 54 new service launches. With 138 new projects so far, 2021 is on trajectory to surpass the hitherto record year 2019, which totalled at 173 projects.
The market segmentation, measured by the number of new services launches, continues to be dominated by the B2G segment, i.e. On-Demand Public Transit. The share of the B2G segment is growing and stands at over 80% in 2021 (ytd), compared to 69% over all years since 2012. As I have discussed before, the massive growth of the B2G segment is still fuelled by a large number of pilot projects which oftentimes are funded through public research programs, structural development funds or other third-party funding sources, thus limiting the budgetary impact for local public transit operators to trial this novel technology and gather experiences. As not all pilot projects will eventually be deemed successful and thus not all will be transitioned into permanent services, it stands to be expected that the steady-state market will be smaller than today, but still of significant size. But it will take another one to two years to allow a robust estimation of the exact market size.
The B2C segment’s downward trend seems to have bottomed out. But the lately deployed services are mostly very small and cover niche use-cases. The remaining active large B2C services with flexible service areas are Via’s B2C operations in NYC, Chicago and Washington D.C., MOIA in Hamburg and Hanover, and the two left-over B2C services of CleverShuttle in Leipzig and Düsseldorf. And in the On-Demand fixed-route services space, SWVL (multiple thousands of buses across markets) is continuing to go strong.
The B2B segment is still rather small, but it needs to be pointed out that in this segment new deployments seem to be less frequently publicized or reported on in press. Therefore, I assume that there might actually be more services active that my dataset currently suggests. Transloc’s long list of shuttle services on U.S. university campuses alone is a likely indicator for that.
Geographically, Europe and North America continue to go head to head, but the United States remain the biggest national market with 45 new services launched in 2021 (ytd). Second to follow is Germany with 27 new projects in 2021 so far. Asia has seen less new projects than in the years before and the only market that continues to be growing at equal pace as Europe or North America is Japan with 17 project launches in 2021 so far, of which Mirai Share grabbed the largest share.
Overall, the dynamic of the technology provider market remains largely the same: Via continues to launch new services like clockwork — since 2019 they deployed an impressive 10 to 15 projects per quarter. Other players like ioki, Spare, Padam or RideCo have also continued to grow at solid rates. The tech provider ranking can thus be roughly segmented in to these four groups:
- The Vias (>150 projects)
- The Contenders (20–50 projects)
- The Ambiguous (<20 projects)
- The Struggling (<2 active projects)
It has to be kept in mind though, that this ranking only takes into account the number of deployed services. Therefore, we find players like SWVL with thousands of buses across their markets or MOIA with the largest single-city fully electric Ridepooling fleet in the Ambiguous category. As mentioned in my previous articles, a weighted ranking factoring in fleet sizes or revenues would surely be fairer, but data availability and comparability makes this very difficult. Perhaps I can come up with a better classification in a future edition of this market report.
To better understand market dynamics, it’s worth examining the regional market share of the tech providers, as I have started doing in my Q2 2021 report on LinkedIn. Albeit holding a total global market share of 27%, Via’s dominance is predominantly in Anglo-Saxon markets. Strong regional players have emerged in Europe (ioki in DACH, Padam in France, Shotl in Southern Europe) and Asia (Mirai Share in Japan, DiDi in China, SWAT in SEA).
With regards to DiDi’s market share, it is unclear to me how their public transit-focused Ridepooling pilots were affected by the recent crackdown on BigTech of the Chinese government.
In Q3 there has also been more activity in M&A and consolidations. Kyyti went out of business and Bestmile was acquired by ZF, which resulted in the termination of their (few) Ridepooling SaaS services (mostly pilots with autonomous vehicles). The biggest news was clearly the acquisition of Spanish startup Shotl by SWVL, the (soon to be) NASDAQ-traded, Dubai-based Unicorn.
Meanwhile, Mobileye/moovit and MOIA announced autonomous Ridesharing services set to launch in 2022 in Munich and 2025 in Hamburg respectively. While moovit’s service looks likely to be more of a Ridehailing/Taxi-type (non-pooled), MOIA is planning to start commercial operations of an autonomous Ridepooling service after completing a testing period which has started in Q4 2021.
The project sizes, measured by the number of vehicles deployed, continue to be very small. The average fleet size across all market segments is merely 4 vehicles. The B2G segment is slightly bigger with an average of 6 vehicles (as of end of Q3 2021). This low number is a logical consequence of the predominant use-case of most of the recently deployed On-Demand Ridepooling projects (low density area or daytime services) and the large portion of pilot projects with limited duration and scope. I do see a risk for the market in the dominance of these extremely small projects, as the optimization potential of the software is very limited when supply and demand is so small. In these very small projects it can be challenging to prove the value-added of using Ridepooling technology and thus justifying the extra expenditures. But as mentioned above, it will probably take another two or so years and the completion of more pilot projects before it will become clear how many of these very small projects will be transitioned into permanent services.
Estimating the On-Demand Ridepooling Market Volume
There have been a few studies by well-known consultancies on the market size and most of them forecast a very large total market volume and a signifiant growth over the next 5 to 10 years (e.g. here or here). Personally, I take them with a pinch of salt.
- The lack of an unanimous definition of On-Demand Ridepooling makes it unclear what feeds the base volume, which then gets (somehow) extrapolated.
- The motivation for publishing these kinds of studies is not always strictly analytical (publicity, paid gigs etc.).
So I decided to try to estimate the current market size myself, which is not a straight-forward undertaking. Project characteristics, contract value-chains, service design, operator models, fleet sizes etc. vary massively. Therefore, I decided to borrow a method by Bent Flyvbjerg called Reference-Class Forecasting. Very simply put, this method helps estimate the costs of infrastructure projects under circumstances of uncertainty by doing a simple ex-post analysis of the actual costs of comparable projects that have been implemented in the past and forming the average.
As it is by far the largest market segment, I decided to focus this analysis purely on the B2G segment, i.e. On-Demand Public Transit. Also, in the B2C and B2B segment projects costs are usually not published.
To do this analysis I needed three data points: Fleet size, project duration (months) and total project budget (technology, vehicles, drivers, operations etc.). It didn’t matter if parts of the value-chain were contracted or if they were done in-house by a public transit agency, as I wanted to estimate the total market volume, not average contract values for specific services (but I’ll get to that in a moment, too).
So I did some googling and managed to dig up the necessary data for 20 projects from Germany, USA, Singapore, New Zealand, and Canada. Fleet sizes varied between 1 and 75 vehicles and project durations between 12 and 60 months, but the key finding is that in average, B2G On-Demand Ridepooling services require approximately 220,000 USD per vehicle per year to operate (all-in; 95% confidence interval between US$180k — 260k). To circle back to Professor Flyvbjerg’s method, this figure can be used as a rough preliminary planning basis for PTAs when conceptualizing new On-Demand Ridepooling services.
Next, I pulled the data for the number of B2G projects running per year and average fleet size of these projects from my over 650 entries strong On-Demand Ridepooling projects database. Although the dataset goes back to 2012, I decided to cut off the years before 2016 as I consider the number and maturity of the projects in these years too low to be representative.
The B2G On-Demand Ridepooling market in 2021 so far has a volume of over 440 million USD (year to date), and should surpass 500 million USD if Q4 continues the strong growth trend as expected. To disaggregate this number, each B2G project has in average an annual budget of approx. 1.5 Mn. USD. The fluctuation between 2018 and 2020 can be explained by A) the launch of an uncharacteristically large service in 2018 (GoLink Dallas County with a total of 225 vehicles, albeit not in a contiguous service area), B) a very low average fleet size in 2019 of just 4 vehicles, and C) a spiking of running services between 2019 and 2020 due to an accumulative effect of multi-year projects.
With regards to budget allocation, most B2G projects have roughly a 80:20 split, i.e. 80% operating costs (drivers, vehicles, energy/fuel, marketing etc.) and 20% technology costs. In other words: The On-Demand Ridepooling Software-as-a-Service business has a volume of approx. 90 million USD in 2021 (ytd).
Albeit quite a bit smaller than some of the consultancies’ studies, my (certainly conservative) estimation shows that the On-Demand Ridepooling market has grown to an impressive size not just from the number of deployed services, but also from a commercial perspective. It needs to be emphasized that this analysis only looked at the B2G segment and thus does not reflect the potentially large B2B and B2C segments. Especially demand-responsive fixed-route services in developing nations are not well represented. Therefore, it is save to say that the overall On-Demand Ridepooling market is much larger, however not unlockable with a one-fits-all technology approach with the likely effect that we will continue to see different leaders in each market segment.
Notes / Disclaimer
- All findings shared in this article are backed by an extensive dataset, but should always be understood as informed indications, not hard facts.
- Possible deviations of facts and figures to previous articles of mine are most likely caused by retroactive additions to the dataset, which have been made possible in part by feedback and support from the On-Demand Ridepooling community. I appreciate the overwhelmingly positive and open response to my articles!
- The Google world map gets updated in the background, so it might show services which are not yet reflected in the analysis of this article.
- If interested, please see the notes in my first article on how the data behind the world map has been compiled.
- The views expressed in this article are my own. They do not purport to reflect the opinions or views of my current employer.
