Auckland Council orders Beam e-scooters be deactivated by midnight, refers matter to police

Beam e-scooters will be pulled off Auckland's sidewalks and streets at midnight. Photo / NZME

Auckland Council has cancelled Beam’s e-scooter licence in Auckland and given it until midnight to deactivate its fleet.

The move follows the council’s investigation into a whistleblower’s allegation that the Singapore-owned firm put hundreds more e-scooters on Auckland streets beyond its operating limit of 1200 (or 1400 including seated models) and manipulated the software used by the council to keep tabs on e-scooter numbers.

The council said it will now refer the matter to the police for further investigation.

A report in the Weekend Australian last Saturday, based on leaked Slack conversations and emails from Beam, alleged the firm had defrauded various councils out of “millions of dollars” by operating “phantom” scooters, or rides unknown to councils, with no revenue-sharing (Auckland City Council charged a flat fee per scooter per year, but Wellington City Council took an 11c fee on each ride).

The council in Wellington – where 100 excess Beams were allegedly put on streets – is still investigating. Beam a licence for 500 e-scooters and 150 bikes in the capital, which is reviewed annually.

Beam denied wrongdoing, saying the extra e-scooters were put in place to make up for those that were broken or missing. But it also faced the allegation that it has actively tried to avoid the extra scooters being detected by councils and that it had flagged some scooters as inoperable when they were, in fact, rideable.

Auckland Council asked Beam for an explanation, which it delivered late Friday.

“We have apologised to Auckland Council for any breaches in the cap that resulted from Beam’s program to optimise the number of operational ‘usable or accessible vehicles’ available to the public,” a Beam spokeswoman said this afternoon.

“We do however understand the Auckland licence was already due to expire in two months’ time, with the council currently considering tenders for the new licence to commence from early November.”

Beam wanted to work with councils to resolve the matter. Over the weekend, Beam chief executive Alan Jiang told the Herald his firm was willing to enter negotiations with councils for a commercial settlement.

Beam’s e-scooter licence cancellation did not affect its e-bike licence, an Auckland Council spokeswoman said. Beam is licensed for up to 90 e-bikes, but has not deployed any since April 10, the spokeswoman said.

‘Misleading data’, extra scooters hidden from monitoring software

Information provided to the council has indicated that Beam has been deploying e-scooters in numbers well above the permitted limit in its licence and providing misleading data to conceal this from monitoring reports, the council said in a statement.

Wellington City Council could not provide an immediate update, but the Herald understands its investigations continue, with no decision yet.

Auckland Council’s manager of licensing and environmental health, Mervyn Chetty, says this represents a serious breach of Beam’s licence conditions.

Beam's in-app message to customers - some of whom are on monthly subs or have pre-paid minutes.

“Limits on e-scooter numbers are in place for the safety of other road and footpath users and to minimise nuisance in and around our city,” Chetty said.

“It appears that Beam found a way to sidestep these requirements, which is very disappointing and has resulted in a loss of trust and confidence in the operator.”

Deactivated by midnight, off streets by Friday

“Beam has not provided a satisfactory response to our concerns, as such we have made the decision to cancel their licence, effective immediately. We have asked that all vehicles be deactivated by 11.59pm tonight, Tuesday 27 August, and all devices removed from Auckland’s streets by 5pm Friday 30 August.”

Beam’s licence permits it to deploy up to 1400 e-scooters across Auckland, including 450 in both Tier 1 (CBD) and Tier 2 (inner city), and 500 in Tier 3 (suburban). To ensure compliance with these limits, the council monitors e-scooter deployment numbers through mobility management platform Ride Report.

"Ride Report’s analysis indicates that between July 26, 2023 and August 15, 2024, Beam consistently exceeded their device allowance by almost 40% of its Tier 1 [CBD] and Tier 2 [inner suburb] allocations," Auckland Council said. Ride Report collects real-time data on e-scooter rides for clients including the Auckland and Wellington councils.

“In the last two weeks, Ride Report staff was made aware of concerns related to Beam creating data in a way that is inconsistent with the international standard for shared scooters and bikes,” Ride Report’s North Carolina-based CEO Michael Schwartz told the Herald.

Schwartz shared the data with affected councils that were clients of his firm, including Auckland and Wellington.

‘Intentional anomalies’

Auckland Council was provided with evidence of anomalies between the reported and actual number of Beam e-scooters operating in Auckland and other cities across Australasia by a concerned private individual on August 2. The evidence suggests that these anomalies were intentional, with Beam providing misleading data to Ride Report to appear compliant with cap limits, Chetty said.

The council has since undertaken its own investigation, including requesting further analysis by Ride Report, with the resulting data received on August 18 consistent with the allegations and the council’s own findings.

Ride Report’s analysis indicates that between July 26, 2023 and August 15, 2024, Beam consistently exceeded its device allowance by almost 40% of its Tier 1 and Tier 2 allocations.

“We have not taken the decision to cancel Beam’s licence lightly, however, once we had reason to believe there were clear breaches of the licence conditions, we were able to quickly verify the scale and seriousness of the changes to the data,” said Chetty.

Scooter squeeze

Following the removal of Beam’s devices, Aucklanders can expect to see an initial drop in the number of rental e-scooters available on the streets. The council is currently exploring options to mitigate the shortfall, Chetty said.

All current micromobility licences are due to expire on November 3, 2024, and the council is currently considering applications for the next round of licences, which can start operating from November 3.

Beam's abrupt departure has left Auckland commuters with half the number of scooters.

There are two other current operators: Lime, with an 1200-scooter licence, and newcomer Ario, with a 150-scooter outer suburbs licence.

If neither get permission to fill the breach, or just can’t, scooter numbers on Auckland streets will be halved.

Today’s move was the most dramatic in the micromobility market since Lime lost its Auckland licence in 2019 after a series of braking incidents, tied to a software bug the e-scooter operator was slow to report, which caused a string of serious injuries.

Lime subsequently merged with Jump, which did win a licence (the two firms share a major investor: Uber) and Lime-branded e-scooters returned to the city in the wake of the deal.

Who is Beam?

Beam was founded in Singapore in 2018 by Alan Jiang and Deb Gangopadhyay – both since named to the consumer technology section of the Forbes Asia 30 Under 30 list.

Today it operates e-scooters and e-bikes in 60 cities around the Asia Pacific region.

Auckland and Wellington are its major markets in New Zealand, but it’s also active in Napier, Porirua, Queenstown, Taupō, Tauranga and Whangārei.

In a statement released on April 30 this year, the privately-held firm said: “Beam saw a 36% increase in gross revenue from 2022, to a record US$53 million [$85m] in 2023.”

In the second half of 2023, “Beam achieved a significant milestone by reaching adjusted ebitda profitability; signifying the company’s ability to translate its impressive growth into a sustainable business model”.

The firm was “on track for full-year double-digit profitability in 2024″.

Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.