Bird, a shared electric scooter and bike company, announced its filing for bankruptcy Dec. 20.

While economic experts posit that Bird’s bankruptcy can be attributed to macroeconomic trends, industry-specific challenges and internal factors, industry leaders and scholars maintain distinct views on what this may mean for the future of e-scooter companies.

Scooters brandished with the bright blue Bird logo can often be spotted on campus and in Westwood because Bird has been the only e-scooter company legally permitted to operate on UCLA’s campus since 2019, according to UCLA Transportation.

Bird’s commonplace nature could also be a result of its popularity among students. Rhea Jain, a third-year environmental science student, said she understands the appeal of Bird for Bruins who sometimes scramble to make the hilly trek to campus.

“It’s better than taking the bus and also just convenient when you’re running late for class,” Jain said. “That’s why students use it.”

As an environmental science student, Jain added that she applauds Bird’s strategic business with UCLA especially because of its environmental goal of reducing carbon emissions from car usage.

Despite the popularity and appeal of Bird scooters, Bird riders received an email titled “Happy New Years & An Important Business Update” at the start of 2024 announcing the company’s filing for bankruptcy. The email detailed that as of Dec. 20, Bird had filed for Chapter 11 bankruptcy, through which the company will undergo financial restructuring for three to four months.

According to the United States Courts website, Chapter 11 bankruptcy entails a process during which corporations propose a plan of reorganization to the court on how it will continue its operations to grow the business and make its debt payments. Comparatively, Chapter 7, which is another primary type of corporate bankruptcy, means that the business is completely shut down and that its debt will be discharged.

Bird announced it would continue its operations as usual during its months of restructuring by using $25 million in financing from investment firm MidCap Financial.

A major catalyst for the company’s bankruptcy could be the post-pandemic macroeconomic environment nationwide, according to NPR. In fact, Bird was not the only company that filed for bankruptcy around that time.

According to NPR’s assessment of the findings of S&P Global Intelligence, almost 600 U.S. companies filed for bankruptcy in 2023 because of macroeconomic factors, such as the rise in post-pandemic interest rates. As the Federal Reserve lowered interest rates during the pandemic to stimulate the economy, corporations could more easily borrow and then spend this borrowed money, taking on relatively high amounts of debt without gauging whether they could repay them when interest rates went back up, according to the same source.

Bird went public on the New York Stock Exchange in 2021 at a valuation of $2.3 billion after receiving over $1 billion in investments from over 70 different investors since its founding in 2017, according to Pitchbook. However, Bird was removed from the public market Sept. 22 because of poor financial performance, as it failed to meet the NYSE minimum requirement to have a value exceeding $15 million for 30 consecutive days, according to CNBC.

Juan Matute, the deputy director of the UCLA Institute of Transportation Studies, said low interest made money relatively cheap, leading to high valuations and investments that may not have been reasonable relative to a time of more normalized interest rates.

“Bird is that example of an overvalued startup that went from zero to two billion very quickly – not for really any good reasons,” Matute said. “Money was cheap.”

While low interest rates incentivizing poor financial decisions may explain part of the picture, industry-specific factors also affected Bird’s performance, according to recent news in the industry.

Superpedestrian, an e-scooter rental company that had received investments of $125 million in 2022, shut down its U.S. operations in December for unspecified financial reasons, according to TechCrunch. Superpedestrian’s shutdown, along with the crash of other micromobility companies such as Micromobility.com, Tier and Spin, may indicate the fundamental issues with the micromobility market, according to the same source.

These issues include an ultra-competitive market, city-based regulatory hurdles, technical failures and personal injury lawsuits.

On top of industry-related challenges, Bird navigated several internal issues.

According to The Verge, The Washington Post, Wired and The Wall Street Journal, respectively, overstating revenue numbers in 2020 and 2021, violating city laws by placing scooters in mass numbers in unauthorized areas, exploiting low-income contractors and amassing over a hundred personal injury lawsuits all eroded Bird’s reputation and business.

Matute said while Bird’s request for forgiveness rather than permission from the executive management may have worked briefly, it soured their reputation and relationships with important partners.

“Those relationships with cities and campuses have ended up being what’s essential to staying in business,” Matute said. “So Bird had UCLA but didn’t win a ton of other business.”

Matute said a primary factor in evaluating and allowing transportation vendors on UCLA’s campus is the proposed benefits a company could give UCLA. He added that Bird once had the financial flexibility to provide benefits such as free rides as well as other products using the money it had received from investors, but eventually, it was no longer able to support that amount of spending.

While several layers of issues contributed to Bird’s bankruptcy, industry leaders and experts maintain distinct outlooks on what this may mean for the future of shared micromobility.

Lime, which was once Bird’s biggest competitor and is the current market leader in shared micromobility, remains an outlier in the industry by being the first electric vehicle company to report profitability in 2023. Jacob Tu​​gendrajch, the communication lead at Lime, said in a written statement that one of Lime’s main pillars driving its success is its strong government relations team, which has been able to win a majority of tenders or bids submitted and also maintain a degree of trust.

“In 2023, we submitted tenders for and won more than 90% of competitive permits globally,” Tugendrajch said. “Once we win permits, we’ll continue to invest to expand (Lime’s) service via fleet cap increases granted by cities because of our high level of operational compliance.”

With technology company Uber having about a 29% stake in Lime and Lime’s services being offered on Uber’s ride-hailing app, Lime also operates with the advantage of having access to Uber’s 142 million monthly users, according to Uber’s Q3 2023 Earnings Presentation.

Tugendrajch said in the written statement that despite recent failures within the industry, the future remains bright for micromobility, which is an area of study UCLA graduates can choose to pursue.

Abraham Cheung and Nick Perloff-Giles, who are both graduates of the Luskin School of Public Affairs, assisted the Los Angeles Department of Transportation with a research capstone focused on enhancing access to micromobility transportation in underserved areas in the city. They argued for the consolidation of operators and strengthened government outreach, with implications for more government ownership and stakes in these currently privately owned and operated companies.

“We were trying to look at the ways that, from a policy perspective, … it could be profitable for these companies,” Cheung said. “And some of our interviews with other cities’ agencies – some of them had already moved towards models where they only have one contractor with the entire region that they’re serving.”

Cheung said the benefit of a local city-based monopoly in the market would be to bring consistent profits for one company, while the government could simultaneously ask for equity or community outreach initiatives to ensure widespread accessibility to these vehicles.

While the future of micromobility could potentially head in multiple directions, Perloff-Giles said the e-scooter is here to stay.

“I don’t think the industry is completely collapsing. I think it’s maybe going to … consolidate around a few carriers,” Perloff-Giles said. “And particularly, when it comes to UCLA, I think walkable college campuses are about the most lucrative and best use case for scooters so, … I don’t see them going anywhere.”