The success of micromobility companies hinges on critical capital expenditure investments and operational choices, such as whether to adopt docking systems (i.e., Tembici, Citibike, Divvy, Vélib) or embrace dockless models (i.e., Lime, Mobike and Muvo).

Keep reading to learn more about the advantages of both operational systems and our rationale for our recent investment, together with the Finland-LAC Blended Finance Climate Fund, in Tembici, Latin America’s leading provider of docked bikeshare services.

Docked Systems: An Anchored Approach

Docked micromobility systems operate on a straightforward principle: users pick up and return bikes or scooters at designated docking stations. Key advantages of this approach include:

• Centralized Maintenance: Docked systems facilitate a systematic route for centralized maintenance. Companies can efficiently service and repair vehicles at specific locations, ensuring optimal performance and safety.
• Reduced Theft and Damage: By securing bikes in docking stations, the risk of theft and vandalism decreases significantly. This stability contributes to longer bike lifespans.
• Safe Circulation: Docked systems lead to organized bike parking, promoting safety for riders and pedestrians alike, minimizing bikes left on streets or sidewalks.

Dockless Systems: Freedom of Movement

Dockless micromobility systems are more flexible for the users, allowing them to pick up and drop off vehicles anywhere within a designated service area. Dockless systems offer the following key advantages:

• User Convenience: Dockless systems eliminate the need to locate specific docking stations, allowing riders to start and end their trips within the service area, promoting ease of use.
• Rapid Deployment: Unlike docked systems that require suitable locations, obtaining permits, and constructing docking stations, dockless systems offer a simpler and faster deployment.
• Lower Initial Cost: Eliminating docking stations implies a potentially more cost-effective model, with a less capital-intensive structure.

Recent Experiences of Docked versus Dockless Systems

The earliest bike-sharing systems operated with docked stations. However, as GPS technology and wireless internet connectivity advanced in urban areas, a new operational model emerged—dockless bikes. This model held promise for many investors, theoretically enabling easy mass deployment and constant digital monitoring to prevent theft and vandalism.

Despite the initial appeal, growing evidence shows significant challenges to the dockless’ model. China, the global leader in micromobility, serves as a cautionary tale. It experienced a massive deployment of low-quality, dockless bikes amid intense competition.

The randomly parked bicycles obstructed pedestrian crossings, thousands of bikes laid abandoned on the streets and numerous companies struggled for profitability. Operators of dockless micro-mobility services in Europe and North America face similar challenges.

In August 2023, Paris voted to ban dockless eScooters in a city-wide referendum. The majority of dockless micro-mobility companies grapple with profitability issues, due primarily to persistently high damages and logistical costs.

In response to these challenges, formerly dockless eScooter operators, such as Lyft, announced plans to partially integrate previously dockless eScooters into a docking system for both bikes and scooters. This strategic shift reflects the need for a more organized approach to address the dockless model's operational complexities and negative externalities.

Our Investment in Tembici, the region’s leader in docked bike sharing

A pioneer of the docked bike-sharing model in Latin America is Tembici. Unlike its competitors, Tembici embraced the docked operational model from the start, securing the bikes and facilitating their maintenance, among other advantages.

Tembici demonstrates efficiency in minimizing financial losses from damaged and stolen bikes, along with industry-leading bike utilization rates. Recently, the company introduced an advanced docking station that charges Tembici’s new smart ebikes on-site, eliminating the need to have a full-time logistics and maintenance team swapping and charging batteries.

This systematic solution also allows to reduce greenhouse gas emissions. In contrast, maintenance teams in dockless systems often travel longer distances to locate and repair bikes, resulting in higher emissions. Recent research highlights the need to reduce the carbon footprint associated with repairing and charging (e)bikes and scooters. The company is also successively electrifying its maintenance vehicles and has replaced all its motorcycles in Brazil with electric ones.

Additionally, Tembici is the first micromobility company in the world to issue carbon credits. It also plans to automate the process through a digital issuance system for credits, supported by IDB Invest with technical assistance.

With this mixture of innovation, accessible urban mobility solutions, and sustainability, it is not difficult to assume that Tembici's example will spread, and bikesharing could soon become an essential to the future of Latin American cities.