Auckland Transport's chairman says Lime has until the end of the week to prove their scooters are safe, or he'll recommend they are pulled off the streets.
The comments come amid increasing pressure this week on the San Francisco company, with several Kiwis reporting they have fallen victim to a serious fault where the brakes lock up without warning.
The fault has led to considerable injuries, including an Auckland man breaking his jaw in two places.
Speaking to RNZ's Checkpoint programme, Dr Levy Lester said he is "very concerned" about the fault and gave assurances that the agency is taking the issue seriously.
"I've asked our chief executive at AT in his involvement to alter the threshold of this," he said.
"If we don't get responses quickly, in my view they should take more severe action which could involve curtailing the trial.
"The burden of proof should be on Lime, unless they can prove with immediacy there is no problem, then they should be removed.
"From the outset, I have had serious safety concerns, initially about user behaviour, but recently we're seeing what could be equipment - either software or mechanical failure ... I am very concerned."
Lime is currently operating in Auckland under an Auckland Council and Auckland Transport trading in public places bylaw.
Checkpoint also revealed that former Labour party President Mike Williams had been paid by Lime to introduce their representatives to Auckland Transport staff, as well as Transport Minister Phil Twyford.
Dr Levy said he was "quite uncomfortable with many aspects of this".
Auckland Council yesterday told 1 NEWS that "we are not receiving the assurances that we require, and will be considering our options under the license agreement if we do not urgently receive these".
A representative for Lime took more than two days to respond to a query from 1 NEWS about the subject, and repeated statements previously given to media.
"User safety is our first priority," a spokesperson said.
"We will continue to work closely with Auckland Council and Auckland Transport while the issue is still under investigation.
"The affected scooters have been removed from circulation ... we are in the process of rolling out early detection and additional preventative measures for our global fleet."