ALL the hype around mobility has been focused on the rise of electric cars. Most of the global automakers have jumped on the bandwagon with partnerships and acquisitions to ensure that they are not left behind in the new era of electric dreams.
But there is a lesser heralded growth in the green transportation industry, which is dominated by the versatile and relatively affordable electrified scooters and mini bikes.
Until recently, these “gadgets” were largely confined to children and teenagers taking to the parks for an evening of fun. But Star Wheels Electronics wants to bring them to the “bigger boys”.
Notably, with traffic becoming more congested and with the growing awareness on pollution, more and more adults are seriously considering the use of these e-scooters and bikes for short-range travels.
Founded in 2015, Star Wheels imports and assembles its own brand of e-scooters, e-bikes and hoverboards. Founder and chief executive officer Eric Lee says the company has modified the technology and mechanics of the products to form its own line of e-scooters, e-bikes and hoverboards that are suited for the conditions of local streets.
Thanks to this venture, Lee, who has a knack for mechanical things, has found a way to turn a pastime into a serious long-term business.
“I have long been interested in all things mechanical, so it is only natural that I see these form of electronics as something fascinating. I have spent a lot of my own money and time to buy, dismantle and study the mechanics of these electric scooters and have been thinking of ways to make them better,” shares Lee.
His tinkering has helped the business grow in a short span of a few years.
Today, Star Wheels has around 10 different types of e-scooters and bikes under its own brand.
It has more than 10 outlets and resellers nationwide and currently runs three service centres located at Setia Alam, Subang Jaya and Puchong Gateway.
“We are working to grow our dealerships, with plans for an exclusive dealer in every state. There is a long-term demand for e-scooters and bikes as they are one of the new fun, trendy and green e-mobility products around,” he says.
He notes that sales average about 1,00 units per month currently but with the market waking up to the possibilities of e-mobility, demand could very easily grow. In terms of capacity, the company’s current operating structure can more than accommodate the increase in demand with additional assembly line workers, he adds.
Lee is planning to bring in bigger capacity e-bikes which have become one of the company’s best sellers in recent times due to its longer-range speed.
Star Wheels is also looking at several new markets to export its e-scooters and bikes including Ho Chi Minh City and Manila. These two cities, he explains, face a similar traffic situation whereby roads are choked to the brim with cars. And with public transport not at its best, there is strong demand for alternative modes of transportation like the e-scooters.
But charging into a new market may not necessarily be a great idea, he notes. Lee is hoping to engage some strategic partners to help with its cross-border goals, preferably through joint ventures, to set up dealerships, assembly lines and service centres.
At the moment, Lee holds the majority stake in the company, with his wife and another partner rounding up as minority shareholders.
Given the still unreliable public transportation network in Malaysia, and in many other major cities in the Asean region which suffer from congested roads, the opportunity for a cheaper and more fun transportation mode is vast. Unsurprisingly, many other players – retailers, startups and venture capitals – are eyeing the market.
Lee counts Singapore-based Mobot and Beam as Star Wheels’ closest regional peers in the production and sale of proprietary brand e-scooter segment.The company is unfazed by the entry of other e-scooter sharing startups such as Neuron Mobility, which offers rental services. They serve different market segments and will help to promote the awareness and use of e-mobility, he says.
He adds that the Malaysian market is ready for these players, particularly in dense cities.
“We are also looking at increasing our number of service centres and technicians to serve a larger customer base,” says Lee.
But there is a sense of caution that the market may not grow as fast as the players need it to. As such, getting an early lion’s share of the market is important.
Lee notes that the company needs to accelerate its growth. It is already in talks for a funding round by the end of this year to help fund its expansion plans. Apart from exports, the company is looking to fund the research and development of its own battery, which Lee says will be able to further bring down the cost of its e-scooters and bikes. Preferred investors will, of course, be those with access to electronic and manufacturing expertise. It also welcomes any interest from venture funds and other institutional investors, he adds.
If the global market is any indication, getting private or institutional funders to support its growth plans may not seem like a tough job. For examples, the two-year-old Lime, an e-scooter company operated by US-based Neutron Holdings, snagged US$310mil (RM1.3bil) in a Series D funding round early this year. The new round values the company at US$1.1bil. Meanwhile, another player Bird, founded in 2017, bagged US$300mil in a funding round led by Sequoia Capital and other investors in June 2018. Singapore-based Beam raised US$6.4mil in seed funding last October.
Indeed, 2018 was often tagged as the year of the electric scooters.
But just because investors are pouring in millions of dollars and there is growing usage among consumers, the industry is not without its challenges. There are still questions on whether e-scooters can be a viable long-term micro-mobility solution to the growing traffic problem. Additionally, players have had to contend with regulations in different cities.
Ready for regulation
While the demand and interest in e-mobility products and solutions are increasing in Malaysia, Lee admits that regulation has not kept up with this explosive growth. At the moment, there is no standardised law either at the federal or local level to govern the use of e-scooters and bikes.
Although e-scooters are promoted as a fun and viable alternative to the usual hectic mode of transportation, Lee acknowledges that these gadgets can pose a danger to those who lack the understanding to use them or mishandle them on the road. This could be a serious threat to the industry. Should the number of accidents go up, regulators may resort to extreme measures such as restricting the sale or use of these products.
However, Lee says effort to make e-scooters a truly safe mode of transportation will require more aggressive efforts from not only the supplying companies but also from the authorities – at the federal level right down to local councils.
Being one of the stakeholders in the nascent e-scooter market, Lee says it is in the interest of Star Wheels to engage with the government in coming up with proper guidelines for the use of e-scooters and bikes. This is to ensure the industry is safe and regulated.
“Right now, we are focusing on raising awareness on the usage of e-scooters and educating riders to use them the right way. We aim to educate both riders and the public on riding rules and etiquette, and how to responsibly share public paths.
“What is clear now is that there is a need for a viable last-mile alternative to the current transportation options. With that, demand for this products is set to grow. There should be a long-term solution to the safety and legal framework to support its growth,” says Lee.
Lee is more than happy to take what started out as a hobby to its next phase as a fast growing business. And as a key stakeholder, he hopes to see e-mobility make a long-term impact on the transportation sector.
It is still uncertain as to what the best last-mile transportation alternative can look like. But time will tell if Star Wheels can be Malaysia’s flag bearer for this mini revolution in today’s transportation trend.