C&B Notes

Good for Users, Bad for Business

Venture capital investments are subsidizing products and services for consumers.  An analysis of the operations for Lime and Bird, two competing electric scooter rental companies, tells a story of big unit economic losses on these companies’ scooters. Greater fools may bail them out in the short- or intermediate-term, but the long-term economics of these companies are not promising for their investors.

So, our scooter company walks away with $2.32 in revenue per day from the average scooter in Louisville.  As we said at the beginning, Louisville data indicates that the average scooter was around for between 28 and 32 days.  That means the typical scooter generated something like $65 to $75 in revenue for the company after most operating costs over its lifetime. 

You see where I’m going with this.  Let’s be generous and say the company paid $360 for each scooter, as Bird aims to.  At the rates calculated above, that company only recoups $65 to $75 on the cost of each scooter — in other words, it loses $295 to $285 per scooter.  That doesn’t even include the $50 annual fee per dockless vehicle, the $3,000 in combined licensing fees, or the $100 fee for each designated parking area.  Plug in the $551 sticker price for a scooter, and the losses are even greater. 

Bad as these numbers are, they maybe shouldn’t be surprising.  The electric scooters Bird deployed for shared commercial use, at least initially, were rebranded Xiaomi devices intended for use by a single owner with a weight limit of 200 pounds.  The average American man weighs 197.9 pounds and the average woman 170.6 lbs.  These scooters were also designed to be used in mild weather and on flat surfaces.  They were absolutely not designed to be ridden multiple times a day in all kinds of weather and on all kinds of terrain by Americans who, on average, are barely under the scooter weight limit before you adjust for clothes and any baggage (physical, not emotional) they might be carrying.  No doubt facing such inconvenient truths, Bird in October unveiled an electric scooter designed with Okai specifically for sharing.  It will require great leaps in durability and far cheaper prices for scooters to pay for themselves. 

 

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