Ford Motor Co. (NYSE: F) announced Thursday morning that it has agreed to acquire electric scooter maker Spin. The company did not name the price, but the Detroit Free Press reported that Spin cost Ford “more than $40 million.”
Spin is a two-year-old San Francisco-based company that provides dockless electric scooter sharing with operations in 13 U.S. cities and university campuses. According to Crunchbase, the company raised $8 million in a Series A funding round in May of 2017.
Competition in the scooter business is fierce, and the leading players are Bird and Lime. Bird has raised $415 million in venture funding and Lime has raised $467 million. Ford is paying a significant premium for Spin, but not anywhere near what it would have had to pay for either Bird or Lime.
Ford calls the acquisition an acceleration of its efforts to provide “micro-mobility” solutions. In an article posted to Medium, Sunny Madra, vice president of Ford X, wrote:
Ford is focused on delivering great products and services across the mobility spectrum, seeking to enhance the freedom of movement by building smart vehicles for a smart, connected world. This means continuing to develop world-class vehicles, including more hybrids and battery-electric vehicles. It also means continuing development of self-driving vehicles, which we plan to launch at scale by 2021. Another critical component of our mobility strategy is to develop a comprehensive set of software and services designed to better enable vehicle connectivity and utilization, as well as new mobility experiences and multimodal transportation solutions.
Renting a Spin scooter costs $1.00 plus 15 cents per minute of use, the same rates as both Bird and Lime. Ford cites research indicating that nearly half of all U.S. trips are no longer than three miles and notes: “Affordability, combined with ease of use and electrified power, also means scooters can help tackle challenges such as traffic congestion, parking availability and pollution.”
Spin’s current plans are to expand to 100 markets over the next 18 months, and Ford presumably will make the investments necessary to make that happen. For investors who believe in the scooter market, Ford probably got a bargain here. For those who question a business that has a virtually invisible moat and puzzle over the acquisition of one of the smaller players in that business, Ford might have done better to hold on to the cash.
Ford stock traded up about 0.1% in Thursday’s premarket, at $9.60 in a 52-week range of $8.17 to $13.48.