Ofo quits Seattle by end of month, bikes beyond repair sold as scrap metal

Ofo said in April that it wants to serve more than 100 US cities by end-2018. Then, in July, it downsized 70% of its US workforce.

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Ofo quits Seattle by end of month, bikes beyond repair sold as scrap metal

Chinese dockless bike sharing company Ofo will be leaving US city Seattle on August 31st, amidst permit regulation issues, it told affected users in an email Monday as reported by Geekwire. Ofo is in massive retrenchment globally.

Users in Seattle will receive refunds within 45 days of Ofo’s official departure, it wrote.

“As we wind down our operations, we will be partnering with various non-profit organisations to make sure our bikes go towards supporting great causes,” added the company.

In San Diego, a US city that Ofo still serves, “dozens upon dozens” of signature yellow Ofo bikes were being piled up at a local recycling facility, sold as scrap metal for US$3 a piece, reported local news station KUSI. 

When asked whether its sale of bicycles meant that the company is also pulling out of San Diego, Ofo executive Taylor Bennett told the US media 0utlet that the firm will remain in San Diego, one of its last markets in the country. He added, “We just recycle bikes and old parts that are beyond repair. All part of our normal operations and bike lifecycles.” He also said that since Ofo still serves other US cities, it will repurpose its assets.

Ofo’s bumpy ride in the US

Seattle was the first North American city Ofo rode into in 2017. From there, it began populating other US cities with its two-wheelers, establishing partnerships and collaborations with various associations from Worchester, Massachusetts, to College Station, Texas.

In April, it achieved one million US rides in the first three months of 2018 with a presence in 25 US cities, the company announced in a press release, adding that it is looking to “serve more than 100” by end-2018.

By July, it became increasingly apparent that this 100-US city goal might be out of reach when lawmakers started effecting changes to their respective cities’ bike-sharing policies.

Citing “restrictive regulations”, Ofo announced on July 9th that it will be pulling its fleets out of Chicago, after local legislators agreed that bikes in a sharing programme must be equipped with the ability to lock on to a fixed object, in order to avoid fallen bicycles taking up space on the pavements.

Ofo and its competitor LimeBike were given some leeway; Chicago determined that the two bike-sharing companies can still operate, but must keep bicycles without the appropriate locking systems to under 50 each. Companies with the permitted lock-to technology can operate up to 350 bicycles.

Dallas was yet another US city to follow suit; its City Council decided to regulate bike-sharing companies with a permit system that requires companies to be approved. At US$21 per bicycle, Ofo considered the fee too costly. On July 20th, the firm confirmed plans to exit Dallas. NPR reported that “hundreds of bikes” were sold as scrap metal at a recycling centre in Dallas, while another 250 of them were donated to a local non-profit group.

Other US markets Ofo has since exited include Washington D.C., Massachusetts, Atlanta, New York, and Austin.

At the same time, Ofo staffers were told that the company is “going into sleep mode” in North America, cutting around 70% of its workforce in the US.

Fight with Meituan’s Mobike

It’s not looking much better elsewhere for the four-year-old startup. In a massive international downsizing plan, Ofo said it’s departing entirely from Australia, Austria, Czech Republic, Germany, India, and Israel in efforts to “focus on the most mature and promising markets“, an Ofo spokesperson told TechCrunch in July.

Christopher Hilton, Ofo’s head of communications and public policy for Southeast Asia, told KrASIA in a recent interview that the company is leaving India and several other Southeast Asian markets like Thailand and Malaysia, but will remain in Singapore, Hong Kong, Japan and South Korea. According to Hilton, Ofo can be profitable by end-2018 if it focusses on markets where it has a strong presence.

While the US market might be dominated by the Lyft-owned bike-sharing company Motivate, the Chinese market is still very much a tug-of-war between Meituan-owned Mobike and Alibaba and Softbank-backed Ofo, with some interference from smaller player Hello bike, which raised capital from Alibaba’s affiliate Ant Financial.

Mobike launched its services in the US a month after Ofo. When it was asked to restrict the number of bicycles on D.C. streets to 400, Mobike decided to leave the city. It also left Dallas and other American markets, faced with the same regulatory restrictions as Ofo.

Meanwhile, back home, Beijing lawmakers are also reining these bike-sharing companies in with stricter rules for parking. In Beijing, Mobike told its users that they will be fined if they park outside of a specified zone.

Editor: Nadine Freischlad