Scaling Private Sector Investment in and Government Support for Micromobility in the US
MIT Mobility Initiative Research Briefing
December, 2024
Alex Mitchell
Executive Summary & Key Findings
Transportation accounts for 29% of US greenhouse gas (GHG) emissions, a key contributor to climate change. Despite the clear understanding in the private and public sector of the existential threat posed by climate change, most American investments and policies in transportation focus on transitioning the existing vehicle fleet, especially passenger cars, from the internal combustion engine (ICE) to electric.
An alternative approach would be to encourage a modal shift from passenger cars altogether towards using micromobility, the loose term for everything from bikes to a wide variety of battery-boosted small devices like e-bikes and e-scooters. The following findings underpin how this could happen:
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Private-sector investors are broadly skeptical about investing in the category and would prefer an organic increase in either consumer volumes or willingness to pay, followed generally by more interest in state incentive programs than federal programs, though such state incentive programs already exist.
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Founders in the space acknowledge the difficulty in securing investment for their businesses. To resolve this, founders want infrastructure provided at the city and state levels, followed by federal support for producer-level incentives.
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Policymakers lack a critical mass of bipartisan support to bolster federal support for micromobility, but are experimenting with new tactics (e.g., producer-level incentives instead of consumer-level).
Future investment and growth in American micromobility will likely require federal governmental action, acknowledging the broad benefits of micromobility. Given that historical lobbying messages about environmental benefits haven’t succeeded, it may be worth evaluating new messages, including tapping into strong bipartisan concern about Chinese dominance in all things battery-related.
Background
Transportation accounts for 29% of US greenhouse gas emissions. The leading policy intervention is to electrify cars, including a large tax credit in the Inflation Reduction Act (IRA) to purchase electric vehicles and billions of dollars for electric vehicle charging infrastructure.
The OECD’s International Transport Forum performed life cycle analyses of transport modes. Emissions in grams of CO2 per passenger kilometer are:
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Private bike: ~20
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Private E-bike: ~35
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Private car battery electric: ~130
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Private car plug-in hybrid: ~128
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Private car internal combustion: ~160
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Urban train: ~60
Thus, a private e-bike per km represents a 73% reduction in greenhouse gas emissions vs battery electric private cars and a 78% reduction vs international combustion engines. To date, there is no meaningful federal support for micromobility adoption, whether by tax credit, subscription grant, or other. Instead, federal tax policy incentivizes the solution that is 3.7 times more carbon-intensive.
Similarly, the American venture investment industry has effectively given up on micromobility, in part due to poor experiences with shared mobility (e.g., Bird).
Motivation
The business-as-usual approach is to electrify the 290 million vehicles in the fleet in the US. This falls short by not also encouraging the behavior change of using more efficient form factors for some subset of vehicle miles traveled (VMT).
Beyond the greenhouse gas benefits cited above, notable benefits of also attacking mode shift away from private cars include:
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Efficacy of limited subvention dollars: The price of the average e-bike is $2,000 while the average transaction price for electric vehicles is approximately $55,000. The amount of federal dollars to reach market-moving changes is significantly lower for e-bikes.
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: Active mobility burns more calories than a sedentary commute by car or public transit. E-bikes, for example, provide significant health benefits in terms of heart rate and caloric expenditure.
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National security: The US is resource-poor in some of the natural resources required in the battery economy. As the use of batteries grows in vehicles and energy storage, we run the risk of supply being throttled by trade rivals, such as China. To mitigate such a national security risk, more efficient use of batteries is required. The battery content of an electric car with a 70kWh battery back could be used instead for 140 e-bikes with a .5kWh battery pack.
Research Approach
The primary research methodology was in the form of quantitative surveys and qualitative interviews, aiming to answer two key questions:
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What would need to be in place to get federal support for the US micromobility industry, from manufacturing incentives through to the consumer level?
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What would need to be in place to reboot venture investor support for the US micromobility industry?
Key results and takeaway messages
Defining Micromobility -
Unlike other vehicle types (e.g., Class 8 heavy-duty trucks), micromobility as a category lacks a commonly agreed-upon definition.
Analyst Horace Dedieu is generally credited with coining the term “micromobility,” though his definition is fluid. Dedieu has offered up two different approaches, one to describe “Personal transportation using ‘any vehicles whose gross weight is less than 500 kg’” as well as an alternative definition as “shared vehicles weighing less than 1000 kg.” The Society of Automotive Engineers (SAE) has published a standard that provides criteria for “powered micromobility vehicles” , including powered bicycles, powered standing scooters, and powered seated scooters with a curb weight of fewer than 500 lbs and a top speed of fewer than 30 miles per hour. Notably, this definition excludes exclusively human-powered vehicles and micromobility designed for goods movements (e.g., e-cargo bikes). The Federal Highway Administration (FHWA) defines micromobility as “any small, low-speed, human- or electric-powered transportation device, including bicycles, scooters, electric-assist bicycles, electric scooters (e-scooters), and other small, lightweight, wheeled conveyances.”
For this analysis, micromobility will be defined as vehicles meeting the following criteria:
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One or more wheels
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Human-powered or (partially) powered by electric propulsion
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Owned, shared or leased
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Used for people movement, goods movement, or both
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Maximum speed of less than 50 kph/30 mph
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Weight of less than 500 kg/1100 lbs
Consequently, this definition would include human-powered bicycles, e-bikes, e-cargo bikes, standing scooters (both human and electric-powered), seated electric scooters, quadricycles, and a variety of other similar devices.
Quantifying The Micromobility Benefit -
Intuitively, incentivizing people out of cars and on bikes should be highly effective given the high cost of cars and the large climate impact of private car usage. However, quantifying the benefit of micromobility is difficult for the following reasons:
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Incrementality vs subsidizing planned behavior: To be cost-effective, a program must induce behavior that wouldn’t have happened otherwise. When a consumer uses a subsidy on a purchase they were planning on making anyway, the incentive dollars haven’t generated any incremental benefit.
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Usage & Substitutes: Incenting someone to purchase a micromobility device is not the same as having someone use their micromobility device as a substitute against higher emissions vehicles such as cars. For example, an average e-bike user does approximately 1,000 miles on their e-bike, but only approximately 35% of those miles come at the expense of car trips.
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Difficulty of Quantifying Other Positive Local Externalities: It’s easy to acknowledge the quality-of-life benefits in a city where biking is an option, but it’s harder to quantify a corresponding specific dollar benefit. Similarly, it’s easy to acknowledge the likelihood of weight loss when individuals choose to bike to work rather than drive, but harder to attribute specific weight loss targets to a specific bike incentive program.
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National security: Both major political parties in the US agree on the importance of reducing our dependency on batteries sourced from a trade adversary (i.e., China), but there isn’t a quantified dollar risk associated with this trade dependency.
Recent studies have demonstrated that micromobility incentives are harder to justify from a CO2 perspective than the US BEV tax credit. Compare two hypothetical situations grounded in real-life observed behavior: In one, the owner of an internal combustion engine (ICE) vehicle chooses to replace it with a battery electric vehicle via the $7,500 tax credit. In the other, the owner keeps their ICE vehicle but opts to purchase an e-bike for shorter trips. The challenge in this second case is that the polluting ICE vehicle is still on the road, driving a large number of miles.
Figure 1: Comparison of Two Different Vehicle Incentives
However, this does not imply that e-bikes aren’t worthy of incentives. Instead, it underscores the importance of capturing, over time, the holistic benefit of e-bike adoption, beyond just CO2 to capture health, quality of life, and equity of subsidies.
It also underscores the importance of smart policy design. An e-bike incentive that required, for example, retiring an existing passenger car out of service could have dramatically higher CO2 impacts than the existing BEV tax credit, but would need to be part of a more holistic program that made going car-free feasible to a large number of individuals.
Quantifying Today’s Public Sector Support for Micromobility
Federal policy encourages private car usage, whether that be in the form of federal bailouts when domestic car manufacturers approach failure (e.g., Chrysler Loan Guarantee Act of 1979; GM and Chrysler bailout in 2009) or in the form of consumer-level incentives to purchase new cars (e.g., Cash for Clunkers under the Obama Administration).
Two landmark bills under the Biden Administration offered an opportunity to build the micromobility market: The Infrastructure Investment and Jobs Act (”Infrastructure Act”) and what ultimately became the Inflation Reduction Act (“IRA”), both intending to support a more sustainable American economy, with the former more focused on building the industrial backbone and the latter more focused on consumer-pull.
The Infrastructure Act took minor strides in helping build support for micromobility: Of the $1.2 trillion in funding, the non-profit research institute Transportation for America noted $85 billion in programs (7% of the total) for which some portion of funds could be applied to micromobility.
The precursor to the IRA was the Build Back Better Act, passed by the US House in November of 2021. It featured a 30% refundable tax credit for qualified e-bikes placed into service before January 1, 2026. The bill ultimately failed to pass the Senate due to objections from Senator Joe Manchin. Many of the core elements of Build Back Better were recycled into the landmark IRA in 2022. The IRA included a host of vehicle-related tax credits, including the $7,500 EV tax credit in the Inflation Reduction Act, but none for micromobility.
This is not to say that there is no public sector support for micromobility, just that the most tangible and meaningful support is at the state and local level. There are over 100 e-bike incentive programs in North America, run by local governments, state governments, air quality management boards, and electric utilities. These programs vary wildly in approach: some are rebates while others are discounts, some are means-tested while others are not, some are low as $100 while others are as high as $7,500. The heterogeneity of these approaches may allow for interesting comparative analyses but doesn’t substitute for the market-making ability of a clear, widely understood federal support mechanism.
Quantifying Today’s Private Sector Appetite for Micromobility
Venture capital appetite for investing in micromobility in the US is limited, having fallen significantly over the last three years.
Figure 2: Venture Capital Investment in Micromobility in the US over time
Source: PitchBook (Micromobility VC funding, US-HQ only, excluding Lyft)
Founders and investors disagree on what drives this lack of appetite. A survey in the spring of 2024 of 25 venture capitalists (Survey respondents included 25 VCs across funds, details in the References section) was conducted alongside a parallel survey with 19 founders in micromobility (Survey respondents included 19 micromobility startup founders across hardware and software businesses, details in the References section). Regarding fundability, founders believe micromobility faces significantly more barriers to funding while VCs are split, with almost half claiming that micromobility equally suitable to venture capital funding as other mobility sub-sectors (e.g., EV cars, aviation, maritime, etc.)
Figures 3A and 3B: Founder and VC Perspective on Fundability
VC willingness to invest in micromobility was tested again from another angle and yielded different results. Over half have no intention to invest in the sector, including 24% who previously invested in the sector but don’t plan to going forward.
Figure 4: VC History of Investment in Micromobility
Both founders and VCs were also asked their perspective on what they think would improve the fundability of the micromobility sector across 9 choices:
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Consumer:
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Significant consumer-level volume purchases and overall adoption, independent of incentive policies
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Significantly higher consumer willingness to pay (WTP)
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State and City Policy:
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Significant producer-level support (e.g., manufacturing subsidies)
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Significant consumer-level support (e.g., purchase, lease, or sharing subsidies)
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Significant infrastructure-level support (e.g., protected bike lanes, public bike parking)
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Federal Policy:
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Significant producer-level support (e.g., manufacturing subsidies)
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Significant consumer-level support (e.g., purchase, lease or sharing subsidies)
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Market Structure: Higher concentration of players/more barriers to entry
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Other
These factors have different likelihoods. Changes in consumer behavior, either in terms of willingness to pay per unit or an organic increase in volume demand, were presented as “organic” options, not requiring external interventions to be achieved. While obviously desirable, we are unlikely to see large changes in consumer behavior without further interventions. Similarly, market structure with a higher concentration of players is unlikely to spontaneously occur.
State and city interventions, primarily at the consumer-level support, exist in growing numbers, while no producer-level examples of note have been found. Infrastructure-level support was queried given the primary role that cities and states have in land-use policies.
Two interventions were queried about federal-level interventions, neither of which has come to fruition yet. Once again, perspectives diverged significantly between founders and VCs.
Figure 5: Founder Perspective on Factors Influencing Fundability - Question: What could have the biggest impact in helping secure more funding (equity, debt, etc) for micromobility? (force rank)
In addition to placing importance on the consumer, founders placed high importance on the infrastructure provided at the city and state level. Support for producer-level support was medium-high, ranked most frequently as the third most important lever.
Figure 6: VC Perspective on Factors Influencing Fundability - Question: Which of the following input factors would be most motivating in making you willing to deploy (more) capital into micromobility? (force rank)
VCs would prefer an organic increase in either consumer volumes or willingness to pay, followed generally by more interest in state programs than federal programs. Interest in a federal consumer subsidy is significantly higher than a producer subsidy.
Given the slow changes in organic consumer behavior and existing state consumer incentive programs, federal support may be the best opportunity for an incremental change in micromobility demand and fundability.
The Outlook for Federal Support
In response to the IRA-related failures for micromobility, Representatives Jimmy Panetta (D-CA) and Earl Blumenauer (D-OR) introduced The Electric Bicycle Incentive Kickstart for the Environment (E-BIKE) Act of 2023, which again featured a 30% tax credit for e-bike purchase on bikes priced up to $5,000. The bill stalled after being referred to the Ways and Means Committee.
In 2024, backers have three other bills as well:
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H.R. 6659, the sponsored by Congresswoman Nanette Barragan (D-CA), would appropriate $100M annually for ten years to fund e-bikeshare programs in disadvantaged communities. The bill was introduced in March 2023 and was referred to the Committee on Ways and Means.
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H.R. 3473, Bicycle Commuter Act of 2023, was sponsored by Congressman Blumenauer (D-OR). It allows employees a bicycle commuting benefit equal to 30% of parking fringe benefits. The bill was introduced in May 2023 and was referred to the Committee on Ways and Means.
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H.R. 8625, the Domestic Bicycle Production Act, was also sponsored by Congressman Blumenauer. Notably, this bill shifts the focus from end-user-level support to producer-level support, assuming that the jobs creation potential for domestic manufacturing would yield a better chance of success.The bill was introduced in June 2024 and referred to both the Committee on Ways and Means and the Committee on Energy and Commerce.The bill contains three key provisions that aim to provide producer-level support for domestic production, focusing on both final assembly as well as component manufacturing:
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Instituting a 10-year tariff suspension on imports of bicycle components to incentivize domestic bicycle final assembly operations.
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Creating a transferable electric bicycle production tax credit for bicycles manufactured domestically, starting at 20% of selling price and going down to 15%, 10%, and 5% before phase out in 2035.
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Establishing a $120M fund to make 1% interest rate loans to firms involved in scaling domestic production.
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Congressional legislative analysts as well as advocacy groups believe that no further progress will be made on these bills in the current 118th Congress, due to the impending changes in administration.. Representative Blumenauer, who has been in Congress since 1996, did not seek re-election in 2024.
Nevertheless, work continues behind the scenes to position all bills for success in the 119th Congress, which will meet from January 3, 2025, to January 3, 2027. The future leadership of the Congressional Bike Caucus, which was founded by Congressman Blumenauer in 1996, has been top of mind. The informal bipartisan group has over 130 members caucus and is widely seen as the venue from which future bills will be born. The current co-Chairs are Earl Blumenauer, Vern Buchanan (R-FL), and Ayanna Pressley (D-MA). The offices of longtime caucus member Rep. Mike Thompson (D-CA) have confirmed that he is currently undertaking the transition to take over Blumenauer’s co-chair role. In addition, the future direction of H.R. 8625, the Domestic Bicycle Production Act will be led by Thompson’s office. Notably, Blumenauer, Thompson, and Buchanan are all members of the House Ways and Means Committee, which was the sole jurisdiction in the US to originate federal tax legislation.
Congressional legislative analysts as well as advocacy groups point to two key opportunities in the 119th Congress that may help one of the bills succeed:
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The 119th Congress must decide whether to maintain the tax rates from the Trump-era 2017 Tax Cuts and Jobs Act or allow them to expire. Given that Congress must act or let the tax rates change, both Democrats and Republicans will be eager to negotiate.Both H.R. 3473 (Bicycle Commuter Act of 2023) and H.R. 8625 (Domestic Bicycle Production Act) could conceivably be incorporated into a large tax bill.
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The reauthorization of surface transportation programs for highways, highway safety, and transit often nicknamed “Surface Transportation Reauthorization.” Current operations of the Department of Transportation’s Federal Highway Administration are authorized by the Bipartisan Infrastructure Law, which provides $550 billion over fiscal years 2022 through 2026. One of the key objectives in the reauthorization for micromobility advocates is to ensure that the role of micromobility is formalized and encouraged, as current frameworks generally delineate between highway infrastructure and public transport spending. Some advocates will argue that micromobility, whether shared or privately owned, is effectively public transport, while others will posit that it becomes part of a broader category of “complete streets.”
The likelihood of any of these events in 2025 is tied to how Democrats navigate Republican leadership of the House, the Senate, and the Executive Branch.
Nevertheless, there are reasons to believe that future iterations may face a better chance of success. While the Republican and Democrat parties agree on very little today, both parties are vocal about the threat posed by China’s growing leadership in manufacturing and clean technologies such as batteries. Under President Trump, tariffs against China rose significantly: e-bikes and components imported from China were due for a tariff increase from 7.5% to 25%, but trade officials delayed implementation. Under a Biden administration action, that 25% tariff went into effect in June 2024. The way forward for micromobility legislation may be less on the health, community or environmental benefit and more on the fact that almost all micromobility now comes with a battery attached.
Conclusion
Micromobility can hardly be described as “at scale” given that only 1.1% of the population of the American city uses a bike as their main mode of transportation. But it offers immense benefits, both in terms of low environmental footprint as well as other quality of life benefits.
Reaching breakout success for micromobility will likely require federal support. Given the heterogeneous benefits of micromobility (e.g., quality of life, environmental, job creation), it is worth advocates pushing an “all of the above” agenda in Congress rather than being dogmatic about particular interventions (e.g., consumer-level, producer-level). At some point, one of these interventions will get passed by Congress and will result in a follow-on effect of crowding in innovative founders and capital providers.
References
Adams, Tyler, Legislative Assistant, Office of Congressman Mike Thompson, interview by author, August 30, 2024.
Alessio, Helaine; Reiman, Timothy; Kemper, Brett; von Carlowitz, Winston; Bailer, A. John; Timmerman, Kyle. Metabolic and Cardiovascular Responses to a Simulated Commute on an E-Bike. Translational Journal of the ACSM 6(2):e000155, Spring 2021.
Barnes Wright, Tangier, Deputy Director of Shared Micromobility at PeopleForBikes, interview by author, August 27, 2024.
Dedieu, Horace, retrieved August 31, 2024 from https://micromobility.io/
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Founder survey conducted in spring 2025. Survey respondents included 19 micromobility startup founders across hardware and software businesses. Respondents included Bloom, Cargo B, Drover, Eli Electric, Fatte-Bikes and EQLX Mobility, FTEX, GEKOT Robotics, LAND Energy, ModLev, NEMO, Nimbus, RevolutionX, Schleptastic, Sle, Strut, Tempo, Vammo and Vayve Mobility.
Electric Bicycle Incentive Kickstart for the Environment Act or the E-BIKE Act, H.R. 1685, 118th Congress. (2023-2024). https://www.congress.gov/bill/118th-congress/house-bill/1685.
E-Bike Share Act, H.R. 6659, 118th Congress. (2023-2024). https://www.congress.gov/bill/118th-congress/house-bill/6659/text.
International Transport Forum (OECD), Good to Go? Assessing the Environmental Performance of New Mobility, 17 September 2020.
Investor survey conducted in spring 2024: Survey respondents included 25 VCs across funds with various investment areas, climate tech, mobility, manufacturing, and generalist. Respondents included Aligned Climate Capital, Avesta, Blue Bear Capital, Clean Energy Ventures, Climate Avengers, Collab Fund, Evergreen Climate Innovations, Ibex Investors, Intention, Jetstream, Keiki Capital, Keyframe Lowercarbon, Maniv, MCJ Collective, Mobility Impact Partners, Planeteer, Powerhouse Ventures, RedBlue Capital, UP Partners, The Westly Group, Thin Line Capital and Valo Ventures.
Lipsitt ,J, Milner J, Tansley G, Wilkinson, P “ Spatial Determinants of Bike Mode Share in American Cities: Potential for Health and Environmental Co-Benefits”, ISEE Conference Abstracts Volume 2016, Issue 1.
Office of Richard Blumenauer, retrieved Aug 31, 2024 from https://blumenauer.house.gov/the-congressional-bike-caucus.
Price, J, Blackshear, D, Blount, W Jr, Sandt, L “Micromobility: A Travel Mode Innovation”. FHWA-HRT-21-003, Public Roads - Spring 2021, Vol. 85 No. 1.
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Walker, Zoe, Legislative Assistant, Office of Congressman Earl Blumenauer, interview by author, August 7, 2024.