Uber and Lyft e-bikes hit bumps in the road (LYFT)

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Uber and Lyft have pulled thousands of e-bikes out of circulation from their bike-share services after reports of technical issues with the bikes’ brakes, according to The Verge.

Flickr/JMazzolaa

The problems caused bikes’ front wheels to lock up, propelling some riders off the bikes. Dozens of passengers were reportedly injured as a result of the faulty braking systems. Both companies’ e-bikes use a braking system from Shimano, a third-party supplier based in Japan.

Here’s what it means: The safety issues could dent the standing of Uber’s and Lyft’s micromobility services with two key groups:

Uber and Lyft risk drawing the ire of regulators, who haven’t traditionally viewed micromobility services like e-bikes and scooters favorably. In 2017, for example, New York City cracked down on illegal e-bike use, citing safety risks to pedestrians and riders. Though New York has since loosened its restrictions on e-bikes, these latest braking issues could rekindle local officials’ fight against e-bikes in the city and elsewhere in the US. That, in turn, could hamper Uber and Lyft’s ability to expand their bike-sharing services, both in existing markets and to new cities.
The safety issue also could also alienate consumers and dampen adoption of Uber’s and Lyft’s bike sharing services. Both bike-sharing services and e-bikes are still in the early phases of adoption among consumers. News of safety issues connected to bike-sharing services could make it difficult to convert non-adopters to bike-sharing services, something that Lyft and Uber are keen to do in order to realize returns on the sizable investments they’ve made in the space: Lyft bought Motivate, the parent company of Citi Bike, for $250 million, while Uber spent $200 million to acquire JUMP, its bike-share arm.

The bigger picture: The e-bike issue presents a challenge to Uber’s and Lyft’s micromobility strategies, a key area of focus for both companies. In its S-1 filing last week, Uber said it believes "dockless e-bikes and e-scooters could replace passenger cars for many trips under three miles." The ride-hailing giants hope to eventually become one-stop shops for consumer transit, but they’ll need to address the e-bike safety concerns in order to stay on track.

Uber and Lyft appear intent to take more control over the manufacturing processes for e-bikes to resolve the brake issue, but that’ll be challenging in its own right.Uber modified the bikes affected by the brake issue and is also planning to introduce a new, purpose-built bike of its own.

Lyft has also said it’s developing a new electric bike. But neither company has ever manufactured its own physical products, meaning making their own e-bikes — or even just having more control over the manufacturing process — will be a complex task. Bringing e-bike design and manufacturing in-house will likely require Uber and Lyft to accelerate their pushes to hire hardware engineers, for instance.

Moreover, it may require added R&D investments, which are already sizable: Uber revealed in its S-1 that last year it spent $457 billion on autonomous and flying car R&D alone. Still, the resource-intensive push to develop e-bikes will likely be necessary for Uber and Lyft to mitigate these safety issues and maximize their potential in the burgeoning micromobility space.

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Source: Business Insider – nshields@businessinsider.com (Nicholas Shields)