The economics of scooter rentals.

[neptronix]

( edit: the math is corrected on this initial post because alan noted that i overstated the labor cost )

So our city has got the dreaded scooters and lots of people on the low end of the learning curve for electric vehicle operation have flooded the city.

I was wondering why this got popular so fast, so i did some quick calculations.

These scooters on average cost 0.15 dollars per minute to operate.
Let's think of the smallest unit possible, the single scooter.

There are approximately 43200 minutes in a month. Let's assume a case where the scooter is generating revenue for 1/4th of the day.
43200 / 4 = 10800 minutes.
10800 minutes x 0.15 = $1620 a month in income.

So let's scale this out to 50 units.
Your fleet of 50 is producing $81,000 per month in fares.
OK, so you need to hire a guy to maintain the scooters. 1 guy working full time could probably handle them all.
There goes $60,000 / 12 = $5,000 per month, leaving you with $76,000 a month.
Now you pay taxes and you're out, i dunno, another 25%.

You're making $57,000 a month on 50 scooters after taxes.
Or $684,000 pear year.

On an investment whose initial cost is mostly 50 x 700 dollar scooters, or $35,000.

Wow.

 

[amberwolf]

business insurance?

business licenses, permits?

shop rental?

utilities?

pick-up vehicle costs?

 

[Chalo]

In addition to the stuff amberwolf has mentioned, I think you're grossly overestimating the time these things spend being used/rented. They typically get charged only once per day, and the batteries aren't big.

Battery charging is crowdsourced and paid at a rate high enough to interest some people in doing it.

I think the profit, if any, comes largely out of mining user data. None of them admit to it, of course, but most of them pipe their data to China for, y'know, whatever reason. If it were so easy to turn a profit, you'd see local chicken outfits doing it-- which you do not.

I'm reminded of the pedicab fleet business. Renting the trikes to drivers covers the cost of owning, maintaining, insuring, permitting, and housing those trikes-- ideally. Profit, if there is any, usually comes from selling display ads on the trikes.

The shop where I work has rental bikes. They're not expensive to keep, but they take a long time to amortize before they begin yielding a profit. If they had as much overhead as e-bikes, it would be much harder to make them pay their way.

 

[neptronix]

business insurance?

business licenses, permits?

shop rental?

utilities?

pick-up vehicle costs?

Business insurance and license/permits/legal crap will very wildly based on locale.
You don't need a shop because your scooter mechanic operates like an uber driver ( bring your own tools and vehicle, etc )
You don't need a corporate office until you scale to 1000's of scooters; you can run this business out of a bedroom.

So let's be super pessimistic and say the insurance and permits and legal crap = 10,000/year.
Insurance will be low because you make your riders sign a waiver for injury liability ( all scooter rental companies do this )

OK here's the deal with the employees. If you're getting started out and on a small scale, your scooter mechanic can be the guy who picks up scooters and recharges them. Let's be pessimistic and say you need to pay an employee 18 dollars an hour for your 50 scooter fleet, 8 hours a day, 365 days a week. 365 x 8 x 18 = Your labor cost is 52560 instead of my 30000 estimate.

Now i have no idea if 50 scooters = 8 hours a day job. Probably not. But we're assuming the worst.

Now you're making ~400,000/year.

Now let's be a little more pessimistic and assume that instead of each scooter generating is generating profit for 3 hours a day instead of the 6 i imagined.
Your labor cost is down.
You still pulled in >200,000 for the year.
Cut that in half again - 1.5 hours a day of profit per scooter.. you pulled in over 100,000 year.

Take that profit and reinvest 100% in scooters and another employee.
1.5 hours a day per unit is now 400,000 next year because you spent all your profit on another 150 scooters because you were a smart business man.

I cannot conceive how much money you make on selling data. I doubt it is the goldmine here. 'where 50 people without cars are traveling and what their email addresses are' is probably a side stream that covers some costs i did not consider, like parts costs on the $700 scooters.

But this is a lucrative business and i wanted to roll some numbers to see why "scooter litter" became a problem so fast.
The worst case scenario i've rolled here is still a very lucrative business.

I'd invest in that.

 

[wturber]

But this is a lucrative business and i wanted to roll some numbers to see why "scooter litter" became a problem so fast.
The worst case scenario i've rolled here is still a very lucrative business.

I'd invest in that.

A lot of people seemed to think that was the case with dockless rental bikes - and that doesn't seem to be going all that well.

Other things you don't seem to have factored in are the GPS tracking, mobile payment system, related IT system, loss from damage and theft, and probably other stuff like maybe re-distributing the scooters so that you get maximum usage.

I've seen dockless bikes sitting in the same spot for days. In fact, that's a common complaint about them.

OTOH, you are paying your maintenance guy $30,000 a month in your first analysis which makes no sense.

So your math and numbers are pretty questionable. I'd suggest getting real information before investing.

 

[e-beach]

......legal crap will very wildly based on locale........

The two largest scooter companies in the U.S. are named as part of a class-action lawsuit filed Friday, where nine plaintiffs claim they or their properties have been injured or harmed by Bird and Lime scooters as a result of “gross negligence.”......The complaint, which was filed in Los Angeles County Superior Court and has been obtained by Curbed, includes not just scooter riders but pedestrians who say they have sustained injuries which include broken wrists, toes, and fingers, torn ligaments, face lacerations, and “damaged” teeth.

“We filed this class-action lawsuit against Bird and Lime and the manufacturers of their electric scooters to address the terrible injuries they have inflicted on their riders and pedestrians, and the continuing harm they are causing,” Santa Monica personal-injury lawyer Catherine Lerer told Peter Holley, who broke the news of the suit in the Washington Post. .....snip....


https://www.curbed.com/2018/10/22/18009492/bird-lime-scooter-lawsuit-los-angeles

 

[neptronix]

IT investment is a huge variable i cannot calculate.
You are correct in dinging me for not considering it.
I wanted as simple of a calculation as possible so that we can get an idea of long term costs to profits though.

I am a web developer by trade and would imagine that the computer system that runs this is not rocket science.
Most of the components needed to run the software already exist and can be strung together. The hardest part is making a functioning mobile app.
The hardware to track the scooter is super basic. You run a ~$25 arduino board to a ~$50 GPS/mobile network communicator board and wire that in to interrupt/intercept the scooter's throttle and bounce the signal of what the scooter is doing off a wireless network and then have a server sit and crunch that data all day.

Low power scooters are dirt cheap in bulk, so i estimated $700 per scooter would be a reasonable cost per unit with all extra hardware added. Perhaps this figure is $1000. At $1000, you're still not hurting.

Let's say the IT investment is actually $100,000 for your 50 scooter fleet and the economy of scale is lacking on 50 units because of this.
Ok, your first year in my 2nd worst case scenario is one that is non-profitable.
Your next year is very profitable because your IT work will be very minimal.

It is a business case that still makes sense. Many businesses do not generate revenue for many years.


Liability is a huge variable and will be sorted out in court as time goes on.
You can reduce your liability by changing the scooter design itself. Bird and Lime are both renting scooters with tiny wheels and i have seen people eat pavement just because the 5 inch wheel can slip on uh.... nothing

All the riders of both services have signed a liability waiver before riding. I am not a lawyer, but i wonder if you can successfully win a safety class action lawsuit when a liability waiver was signed by all participants?

A big company can soak this cost in. Someone operating a 50 scooter fleet cannot.

Uber had these same kinds of growing pains, but look at them now.
I would have invested in Uber and Lyft if i had the chance. Absolutely. Despite the fact that the business model started out as basically illegal.
This business model is not for the risk adverse, but it pays handsomely if you can get past the risk part.

 

[StuRat]

...
Low power scooters are dirt cheap in bulk, so i estimated $700 per scooter would be a reasonable cost per unit with all extra hardware added. Perhaps this figure is $1000. At $1000, you're still not hurting.
...

$700.??
What type of scooters are you talking about?

 

[neptronix]

https://www.alibaba.com/showroom/scooter.html

Well, electric scooters start at $150 and go up from there.

 

[e-beach]

http://www.latimes.com/local/lanow/la-me-ln-bird-beverly-hills-20181101-story.html

Opening a new chapter in the scooter wars, Bird filed a lawsuit Thursday against Beverly Hills, seeking to overturn the city’s ban on motorized scooters that has led to the impound of more than 1,000 of the company’s vehicles since July.

The 41-page lawsuit filed in Los Angeles Superior Court marks Bird’s first attempt to use the legal system to overturn a city’s scooter ban, and could set the stage for future confrontations as the vehicles grow more popular.

“Anywhere there’s a ban in California, it’s illegal,” Bird’s chief legal officer, David Estrada, said in an interview Thursday, adding that the company will “aggressively review” bans in other cities.

Bird’s explosive growth in Southern California over the last year has sparked controversy in cities where the electric-powered scooters appeared with little warning. Elected officials in West Hollywood, El Segundo and Ventura have moved to ban the scooters supplied by Bird and its main competitor, Lime.

Los Angeles, Santa Monica and Long Beach have approved pilot programs that would require the scooter companies to follow parking laws and share some data with city officials in exchange for permits that allow a set number of vehicles.

That patchwork of regulations has made doing business more complicated, Estrada said, because residents don’t think about the boundaries for Los Angeles County’s 88 cities when they move around the region.

In the lawsuit, Bird alleges that the Beverly Hills City Council’s July decision to ban scooters violated several California laws, including a clause that gives motorized scooter riders the same rights on the road as drivers, bicyclists and motorcycle riders.

Beverly Hills spokesman Keith Sterling said he could not comment on the lawsuit because the city had not yet seen it.

The lawsuit also accuses the Beverly Hills Police Department of violating Bird’s due process rights. The city impounded more than 1,000 scooters and charged Bird more than $100,000 to retrieve them, without telling the company where they had been parked or for how long, the lawsuit said.

During the appeals process, Bird faced “an opaque and unfair administrative hearing,” overseen by police officers who could not be impartial, according to the lawsuit.

The lawsuit also alleges that Beverly Hills broke California’s open government laws, which typically require that agencies publish agendas for public meetings 72 hours in advance. Sterling said the City Council discussed regulating or banning scooters at a public study session on the afternoon of July 24, and decided afterward to add the ban to that evening’s City Council agenda as an “urgency” item.

By not analyzing the potential effects of a scooter ban, Beverly Hills also violated California’s rigorous environmental laws, Bird said. Electric scooters have the potential to take cars off the road, improving air quality, the company said.

The lawsuit cited a recent survey in Portland, Ore., which found that scooters had encouraged more than 20% of respondents to get rid of a car, or to think about it. Nearly one in five people said they would have used a car to make their last trip if a scooter hadn’t been available. More than one-third said they otherwise would have walked.

California’s environmental laws have been a staple in Beverly Hills’ years-long battle with the Metropolitan Transportation Authority over its plans to build a subway line beneath the high school. But the city’s willingness to go to court over environmental laws doesn’t worry Bird, Estrada said.

 

[fechter]

Those things invaded here in the early days of it. A significant percentage of the scooters were trashed or stolen at this point. Even newbie hackers can figure out how to disable the GPS tracker. People also got pissed at them and threw them in dumpsters, the ocean, etc.

 

[amberwolf]

People also got pissed at them and threw them in dumpsters, the ocean, etc.

So much for "environmental concerns". :/

 

[neptronix]

Those things invaded here in the early days of it. A significant percentage of the scooters were trashed or stolen at this point. Even newbie hackers can figure out how to disable the GPS tracker. People also got pissed at them and threw them in dumpsters, the ocean, etc.

That's exactly what i was thinking when i first saw the business model. What's gonna stop someone from putting a space blanket over them, transporting them to a clandestine EV lab, clipping the GPS sensor and throwing a controller on it and.. hey.. free scooter?

But it looks like scooter co. has enough profit and enough money to accept this loss to a point.

The lucractive looking numbers are probably why they flooded the area with these things.
Kinda amazing that people will pay pay $0.15/minute when you can recharge the thing for $0.05.

 

[Punx0r]

The huge amount of venture capital they managed to raise sounds like the most appealing aspect of the business!

 

[nicobie]

The huge amount of venture capital they managed to raise sounds like the most appealing aspect of the business!

exactly...

 

[StuRat]

I'm confused.

Are we talking vespa-style scooters as in sit on and ride like a motorbike... kids skatepark scooters... Currie style kick scooters with pneumatic wheels...

 

[neptronix]

Talkin' bout scooters like this, since that's what these distributed scooter rental companies are using.

 

[amberwolf]

I doubt we'll be seeing htem in Phoenix anytime soon; they're illegal here on any public path/sidewalk/street/etc. (because of the number of accidents, injuries, etc. some years back from them when Razor started selling theirs, I think it was). The police do enforce it sometimes, but I don't see many people riding them, other than little kids right around their homes in their neighborhoods.

I don't know if surrounding cities also forbid them; PHoenix does it under the "toy" definition, since they don't match the definition of any other "vehicle" or wheel transport, they make them match that one, and exclude "toys" from the roads and paths/etc.

 

[Chalo]

Kinda amazing that people will pay pay $0.15/minute when you can recharge the thing for $0.05.

I understand that the folks who collect and charge them make a minimum of $5 per charge. Up to $20 to track down derelicted ones.

 

[e-beach]

Kinda amazing that people will pay pay $0.15/minute when you can recharge the thing for $0.05.

I understand that the folks who collect and charge them make a minimum of $5 per charge. Up to $20 to track down derelicted ones.

If you don't mind collecting them after 9pm (maybe 10pm) and then putting them out before 7am. How much can you make? $20 or $30 dollars a night not counting your gas, ware on the automobile, cost of electricity to charge them and about 6 hours of sleep per night....
Doesn't sound all that great.

 

[Chalo]

I understand that the folks who collect and charge them make a minimum of $5 per charge. Up to $20 to track down derelicted ones.

If you don't mind collecting them after 9pm (maybe 10pm) and then putting them out before 7am. How much can you make? $20 or $30 dollars a night not counting your gas, ware on the automobile, cost of electricity to charge them and about 6 hours of sleep per night....
Doesn't sound all that great.

I think folks who do it generally make more than $20 or $30 at a time.
[youtube]RbouTftw3RY[/youtube]

My point was that these things only run for a limited number of minutes per charge, and then the charge costs the company $5-$20. I doubt they're profiting on the rental income.

 

[neptronix]

Wow..... wrong car for the job, to put it lightly..

[youtube]nJf-MedhAeA[/youtube]

Here's a scooter aficionado talking about how some of these rental scooter designs are safer than others..

[youtube]_M_d7EIaXV4[/youtube]

This goes into the economics.. apparently a realistic expectation is making 22.50/day after paying your charging guy.

 

[neptronix]

Video from mid 2018 about what scooter charging can make.

[youtube]W4CpjP8U6Z4[/youtube]

 

[e-beach]

So I hear the chargers on these scooters are 42v. Does anybody know what voltage these scooters are?

 

[amberwolf]

If the charger is 42v, that's a "36v" battery pack. (10s Li-Ion/etc)