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E-scooters and e-bikes

How might the new Conservative government and Brexit affect this growing market?

Background

In case anyone has failed to notice there has just been a third general election in four years. In addition to all the talk about Brexit in the lead up to the election (and for a long before that), domestic issues also took centre stage in the parties’ campaigning. One hot topic, no pun intended, concerned climate change and the various pledges to go carbon neutral. A part of this will invariably involve urban mobility improvements and reduction of pollution and traffic in our towns and cities. So what options could gain popularity in the 2020s and beyond?

In recent times, the popularity of e-scooters and e-bikes has increased substantially. If you have spent any time out and about in a major city in the UK you are likely to have encountered one (whether you realised it or not). Cars are becoming more technologically advanced, so why not other modes of transport?

For those interested in travelling by a means of transport beyond ‘conventional’ scooters and bicycles, there are already a significant number of motorised two-wheeled options to choose from. In addition to e-bikes of various shapes and sizes, there are a number of other contraptions, collectively grouped as ‘powered transporters’. These include Segways, powered unicycles, U-wheels, hover boards etc.

The main issue for users is that, with the exception of e-bikes (classified as “Electric Power Assisted Cycles” or “EPACs”, which have their own set of rules) powered transporters cannot currently be used legally on a road. This is because there are no specially designed rules for them under existing legislation. They are therefore covered by the same laws and regulations which apply to motor vehicles. Under the Road Traffic Act 1988 (“RTA 1988”), a motor vehicle is defined as “…any mechanically propelled vehicle intended or adapted for use on roads…”. They must therefore comply with requirements for insurance; conformity with technical standards and standards of use; payment of vehicle tax, licensing, and registration. They also cannot be ridden on pavements, cycle lanes, bridleways and restricted byways. The only place where it is legal to use them under the RTA 1988 is on private land (with the land owner’s permission), although this could be subject to challenge as being potentially incompatible with European law.

E-bikes can be exempted from being classed as a ‘powered transporter’ if they meet certain criteria, including:

  • they must be fitted with pedals which can propel it;
  • the maximum power for the motor must not exceed 250 watts; and
  • the electrical assistance must cut out at a limit of 15½ miles per hour (25 kilometres an hour).

In default of meeting the above, this would result in being treated as a moped (requiring registration, insurance etc to be used on a public road).

Increasing popularity

Perhaps the EPAC exemption is one of the factors behind the growing popularity of e-bikes. A leading retailer survey in 2018 claimed 70,000 e-bikes were sold. A survey by Mintel found that one in 20 people asked intended to buy an e-bike within the next 12 months. Some major retailers are projecting e bike growth in 2020 by up to 30%.

This popularity is also reflected in the number of different guises and model types which can now be seen on the open market. Models range from conventional flat bar hybrids to road bikes to fold-up commuter bikes. Prices and the weight of some models are falling significantly. Some rural trail centres now offer electric bikes in addition to conventional mountain bikes, and some companies are looking at moving their offerings into the city with dockless electric bike share schemes.

Notwithstanding the current regulatory issues faced, dockless e-scooter schemes have been trialled in the UK. Bird, a US company, has trialled a scheme with 50 scooters in the Queen Elizabeth Olympic Park in London earlier in 2019. Other companies will no doubt keep a keen eye on the UK regarding the potential for public-use roll out. To put some perspective on the potential of e-scooters, the global electric scooters market size was valued at USD 17.43 billion in 2018, and the potential growth of e-scooter sharing service in European countries such as France, Germany, and Spain, as well as the US has increased demand significantly.

Insurance position

As far as e-bikes are concerned, because they have their own set of rules and are not classified in the UK as a powered transporter, insurance is not mandatory. The debate as to whether cyclists (pedal or electric) should have specialised insurance in order to share the roads with insurance paying cars and motorcycles is a well-trodden path. The debate has been often looked at but argument supporting compulsory insurance never taken up. Issues with enforcement, registration, testing, logistics, in addition to being contradictory to government attempts to encourage cycling take up (for health benefits, reduction of carbon emissions and the like) makes this position unlikely to change.

Currently, e-scooters and all other powered transporters are subject to compulsory insurance requirements. Similar environmental arguments could be made supporting their use. However, the absence of the same sort of perceived health benefits when compared with cycling may make these considerations tricky. Whilst some commercial operators may well have insurance for third party losses or damage, it is extremely doubtful whether most individuals would take out such an insurance policy. Assumptions that a home insurance policy would cover the use of a powered transporter could well be misplaced. Is this a potential new line of business for some insurers, or a potential problem for a not-so-clearly worded policy for others?

Brexit

As we are all aware, the UK is due to leave the EU on 31 January 2020. Whether this happens remains to be seen, although the government’s new majority makes this more likely. If so, the position regarding our legislative fallout is unclear. It may be the case however that the UK wishes to maintain a position of close alignment with the European Motor Directive which states that all motor vehicles must have insurance cover, and furthermore does not recognise the exclusion applied by the UK to EPACs.

In potential conflict with the Motor Directive is the UK’s government’s ongoing review of urban mobility. The Department for Transport (“DfT”) carried out a substantial review in March 2019 and specifically considered exemptions to current e-scooter restrictions. Further initiatives are in the offing - seven areas of the UK have submitted plans to the DfT for Future Mobility Zone funding, with three winners selected to gain access to a share of a £70 million fund. Some plans include micro-mobility solutions involving e-scooters and e-bikes. Perhaps Brexit, and absent the constraints of binding European law in time will give the DfT the opportunity to extend exemptions to e-scooters and other powered transporters.

For some, amendments to current law would be welcomed. One potentially interested company, Voi, claimed that Brexit has delayed the potential launch of public-use e-scooters in the UK and, further, that Britain risks being ‘left behind. For others, concerns around safety and potential for injury to third parties may be a bridge too far to exempt the current mandatory insurance requirements for powered transporters. Whichever side of this debate one may fall, certainly some close further scrutiny and consideration of the use of e-bikes and e-scooters is likely in the foreseeable future.

For further information or if you have any questions regarding the update, please contact Philip Nicholas, Associate, on 0161 233 7397, or philip.nicholas@weightmans.com.

 

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