Three major cycle-sharing companies have pulled out of Britain’s cities in just over a year. Can the schemes ever be sustainable?

Not so long ago, Chinese bike-sharing company ofo was planning to put 150,000 of its distinctive yellow bikes on London streets. Buoyed by $2bn of venture capital funding, ofo was going to “optimise city resources” and “save public space”.

Mobike, another Chinese start-up and ofo’s main competitor, was also apparently in the business of tech-altruism. Its journey data would provide “invaluable insights” for local planning departments.

But in January, ofo followed oBike and Urbo to become the third dockless operator to withdraw from Britain in just over a year.

New data gathered by Oliver O’Brien, an academic at UCL’s Consumer Data Research Centre, shows that the four major dockless operators covered an area of 617 sq km during the peak competition period in July 2018. Of those four, only Mobike remains, and its operating areas have shrunk, to a total of around 37sq km. Yobike operates a smaller dockless scheme in Bristol and Southampton which is not captured in the data.

The most dramatic boom and bust was oBike, which put 1,300 bikes in London in July 2017, and withdrew them four months later. Wandsworth council impounded hundreds, complaining the bikes had appeared “without any warning”. In the absence of regulation, operators don’t need to consult councils before launching.

It’s impossible to know the exact number of bikes on the streets. Operators are cagey because of high losses to vandalism and theft. In London, O’Brien’s latest count shows just over 2,100 bikes at the end of January, down from a peak of 5,800.

But Joe Seal-Driver, a Trustee of CoMo UK, a trade body which represents shared mobility firms, says dockless isn’t dead.

“The industry’s taken a breath, there’s been a pause in the expansion of bike services. But you’ve got new operators coming through. The fact that we’ve not seen a model with hundreds of thousands of bikes running for years in the UK yet doesn’t testify to [failure].”

Steve Milton, Mobike’s head of growth and PR in Europe, said the company had learned to pick its battles. “Many cities across Europe want bike sharing, while others just put the shutters down.

“Do we really want to fight that? Or do we just want to go where people actually want us? For 2019, our focus is building a sustainable business.”

Facebook Twitter Pinterest Last month ofo shut its international division and has laid off thousands of staff. Photograph: Jack Taylor/Getty Images

Can dockless ever be profitable and sustainable? Milton claims some European cities have already met a break-even target, but will not reveal which ones. Meanwhile Mobike is downsizing its fleets to “avoid an oversupply,” according to Chen Shaohui, the chief financial officer of parent company Meituan, which bought Mobike last April.

Ofo shut its international division last month, and has laid off thousands of staff. It is estimated to owe more than 1bn yuan (£114m) in deposits in East Asian markets.

When ofo arrived in Sheffield this time last year, Douglas Johnson, a Green councillor, decided he was going to learn to cycle. “I never had a bike when I was a kid, so I thought it was a chance to get to grips with it”, he said.

“There was a lot excitement about ofo. The bikes were simple to use, there was no cost to the taxpayer at all.”

But with the excitement came the slew of local news reports about bikes dangling from trees and set alight for fun. Just six months later, ofo had removed all 2,000 bikes.

“I was sad to see them go. But as I found out a bit more, it wasn’t simply because of the selfishness and destructiveness of Sheffield people, it was part of a bigger global restructure.”

Ofo was a big thing in Sheffield, despite the hills, despite the weather. People were raring for it Adam Rose, former operations manager

As a result of the restructure, Adam Rose, ofo’s former operations manager in Sheffield, was made redundant.

“It was really exciting at the start,” Rose said. “It was was all about bringing other cities in, all about land grab.

“But then suddenly that all changed. Bikes weren’t being delivered, there were cashflow issues, suppliers weren’t being paid”. Rose himself is still owed £6,000 in expenses and remains unemployed.

Sheffield saw the most dizzying success and the most difficult setbacks. “It took all of London a year to hit the rider figures we got by our third week”, Rose said.

“It was a big thing in Sheffield, despite the hills, despite the weather. People were raring for it.

“Unfortunately we also had the highest vandalism and theft rates. I couldn’t say exactly how many bikes we lost, but it was certainly in the hundreds.”

Rose can’t explain the exact reasons for the termination. “We just got told what to do by China, never why. We had to come up with our own assumptions and give our own stories to the staff on the ground.”

Sheffield used to have a dock-based bike share system funded by the university and the council. When ofo arrived, that was no longer considered financially viable. The council and the university have no immediate plans to restart the system.

In a number of London boroughs, dockless and dock-based bikeshare coexisted. Islington councillor Paul Convery said ofo and Mobike were able to cater to demand that wasn’t met by Transport for London’s Santander Cycles scheme, which is concentrated in the south of the borough.

He believes there’s a happy medium. “Mobike and ofo had a crazy, buccaneering venture-capital ethos. They were burning through millions in start-up money.

“TfL is the exact opposite, hugely over-cautious about spending, and it really suffers from that. That said, it is meticulously managed and has very high user satisfaction.”

For now, Santander’s coverage in Islington remains limited. Ofo has withdrawn, and Mobike’s future is uncertain after its Memorandum of Understanding with the council has expired.

Meanwhile, new dockless operators continue to enter the market. Lime, which has put electric bikes in US cities and across Europe, has just launched in Brent and Ealing, while Uber is considering launching its Jump e-bikes in the UK.

“Everyone’s trying to be the Amazon of mobility”, said Katharine Butler, co-founder of bike start-up Freebike, in an interview with Yahoo. Mobike’s CTO Joe Xia has talked about the company’s ambitions to cover longer journeys, and even get into “flying cars”.

The current regulation is not fit for purpose. It treats bikes as clutter rather than as transport Nicole Badstuber, researcher

But if the endgame of dockless bike companies is to become “multi-modal” platforms covering a range of different transport types, they’ve hit a bump in the road. Unlike Airbnb and Uber, who outsource costs by minimising fixed assets, the production and maintenance of a dockless bike fleet has proved hugely – often fatally – expensive.

Nicole Badstuber, a researcher in urban transport governance at UCL, believes there is a future for dockless, but only if cities take the lead.

“The current regulation is not fit for purpose. It treats bikes as clutter rather than as transport. Looking back, councils were on the back foot with dockless, they wanted to see how the market played out.

“Our streets are public space, and local government should have powers to guide how companies are using that space. If we want to reduce congestion or see more active travel, cities need to take a more proactive role.”

Badstuber cites Bologna, where the council has signed a contract with Mobike to provide its bikesharing service, as an example of close collaboration. In the UK, the Greater London Authority has proposed London-wide regulation of dockless operators, overseen by TfL.

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Despite the setbacks of the last year, Seal-Driver remains optimistic. “For every problem with bike sharing, there’s a technological solution”, he says.

O’Brien proposes a mixture of better incentives for users to help with the onerous task of redistributing bikes, and heavier fines for negligent companies.

But clever technological solutions are secondary to economic realities. Turning a profit on rides alone seems improbable when you factor in the costs of replacing vandalised and stolen bikes.

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