- Electric scooters!Love them or hate them,they're everywhere now.
Shareable electric scooterscan be found in most American cities.
And they're quickly expanding around the worldto cities like Paris, Vienna, Madrid, and Tel Aviv.
Scooter-sharing has been one of the biggest tech crazesof the last year with venture capitalistspouring more than $1 billion into the startups, but there's a dark sideto scooter-sharing.
You see, the fundamental numbers don't really add upbecause the scooters don't bring in enough moneyto cover their cost.
Ride-sharing is wildly unsustainable,and if the business continues on this current path,it's entirely possible that these scooterswill end up in a mass graveyard,like those viral photos from China.
But to understand the nuts and bolts of scooter-sharing,we really need to look at the big picture.
(techno music)- Electric scooters like this onehave flooded the streets of Santa Monica in recent months.
- The scooter phenomenon got its start in September 2017,when a company called Birdbegan dumping electric scooterson the streets and sidewalksof Santa Monica, California.
A bike-share company, Lime, followed suit,dropping its scooters in San Francisco,and the race was off.
People complained about blocked sidewalksand scofflaw riders,but the scooters were cheap to use —typically costing a dollar to unlockand then 15 cents for every minute of riding.
And wouldn't you know it,they turned out to be really popular —racking up millions of ridesand earning Bird, Lime, and their competitorstens of millions of dollars in revenue.
The startups used the rising popularityto rake in an additional hundreds of millions of dollarsin investment cash.
And that's when scooters really startedto appear everywhere you look.
But despite all that cash,it's really hard to turn a profitwhen you look at the unit economics.
That's how much revenue each individualscooter brings in for the company.
And the most important number to consideris the life span of each scooter.
The more trips and milesa single scooter can cover,the better it is for the scooter company,which have to recoup the cost of each vehiclebefore they can start making money.
In October 2018,it was reported that Bird was spending $551to purchase each scooterwith the goal of reducing that cost to $360.
That meant Bird needed five rides a dayfor a little over five monthsto recoup the initial cost of the scooter.
But the early data suggeststhat these scooters aren't lasting five months.
They're not even lasting for two months.
In fact, the scooter companies would be luckyif these things last longer than 30 days.
Now, Quartz crunched the numbersfrom Louisville, Kentucky,and found the average lifespanof a scooter was only 28.
8 days,doing an average of three and a half rides per day.
At these rates, Bird only recouped $67on the cost of the average scooter.
In other words, it loses a whopping $293per scooter.
That's not even factoring in a host of other costs,like taxes and fees.
Now, Bird disputes this analysis,claiming that scooters get moved around,sometimes to different cities,and that just because a scooter lasted in Louisvillefor 28 days doesn't mean that that's its entire lifespan.
And it's certainly true that the average lifespancan vary depending on the terrain,the city, and the amount of use.
But it's also true that these thingstake a lot of damage.
They get knocked over, thrown into rivers and lakes,they get tossed up into trees,they even get set on fire!The vandalization of scooters has become a viral trend.
Last October, scooter haters dumped 60 electric scootersin a lake in Oakland, California.
Now, part of the reason they're breaking so fastis that these scooters were never meantto be used this way.
The electric scooters that Bird deployed,at least initially, were rebranded Xiaomi devicesintended for use by a single ownerwith a weight limit of 200 pounds,in mild weather, on flat surfaces.
So when the rider's a little heavier,or the ground is a little wetter,things start to break.
Even the guy making tons of moneyoff of scooters has his doubts.
A top executive at Segway-Ninebot,which sells its scooters to the ride-sharing companies,questioned in a recent interviewwhether scooter-sharing was a sustainable business.
So how can scooter-sharing startupsturn these grim numbers around?Well, thanks to the millions of dollarspumped into electric scooter companiesby venture capitalists, they may not have to.
At least, not right away.
Investors are betting that these companieswill be worth billions of dollarsonce they figure out how to turn a profit.
And as long as they think that,they'll be willing to pour more money into making it work.
The scooter companies say they want to become profitable,or at least stop losing so much money.
The CEO of Bird told methat in order for his companyto eventually break even,the scooters will need to increase their lifespanto six months.
That's a lot longer than 28 days.
Their plan is to build a better scooter,one that's more durable and longer-lasting.
And they're starting to do that.
Bird rolled out its new, more rugged,Bird Zero scooter recently,which is manufactured in collaborationwith a Chinese company called Okai.
Lime did the same with its new Gen 3 scooter,and there are other ideas in the works,such as built-in locking mechanismsand field-swappable batteriesthat can help reduce the daily wear and tearon these scooters.
Will these new, more rugged scooters last longer?Probably, but they'll unquestionablybe more expensive to manufacture,which means they'll need to stay in operation even longerbefore the companies can begin to recoup their costs.
It's a Catch-22, and it's not entirely clearthat the scooter startups have a solution.
And in the end, it may not just be the scooters,but the companies themselvesthat end up having shortened lifespans.
Thanks for watching and if you're riding a scooter,please be safe and wear a helmet.
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