- Electric scooters!
Love them or hate them,
they're everywhere now.
Shareable electric scooters
can be found in most American cities.
And they're quickly expanding around the world
to cities like Paris, Vienna, Madrid, and Tel Aviv.
Scooter-sharing has been one of the biggest tech crazes
of the last year with venture capitalists
pouring more than $1 billion
into the startups, but there's a dark side
to scooter-sharing.
You see, the fundamental numbers don't really add up
because the scooters don't bring in enough money
to cover their cost.
Ride-sharing is wildly unsustainable,
and if the business continues on this current path,
it's entirely possible that these scooters
will 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 one
have flooded the streets of Santa Monica in recent months.
- The scooter phenomenon got its start in September 2017,
when a company called Bird
began dumping electric scooters
on the streets and sidewalks
of 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 sidewalks
and scofflaw riders,
but the scooters were cheap to use —
typically costing a dollar to unlock
and 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 rides
and earning Bird, Lime, and their competitors
tens of millions of dollars in revenue.
The startups used the rising popularity
to rake in an additional hundreds of millions of dollars
in investment cash.
And that's when scooters really started
to appear everywhere you look.
But despite all that cash,
it's really hard to turn a profit
when you look at the unit economics.
That's how much revenue each individual
scooter brings in for the company.
And the most important number to consider
is the life span of each scooter.
The more trips and miles
a single scooter can cover,
the better it is for the scooter company,
which have to recoup the cost of each vehicle
before they can start making money.
In October 2018,
it was reported that Bird was spending $551
to purchase each scooter
with the goal of reducing that cost to $360.
That meant Bird needed five rides a day
for a little over five months
to recoup the initial cost of the scooter.
But the early data suggests
that these scooters aren't lasting five months.
They're not even lasting for two months.
In fact, the scooter companies would be lucky
if these things last longer than 30 days.
Now, Quartz crunched the numbers
from Louisville, Kentucky,
and found the average lifespan
of a scooter was only 28.8 days,
doing an average of three and a half rides per day.
At these rates, Bird only recouped $67
on the cost of the average scooter.
In other words, it loses a whopping $293
per 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 Louisville
for 28 days doesn't mean that that's its entire lifespan.
And it's certainly true that the average lifespan
can vary depending on the terrain,
the city, and the amount of use.
But it's also true that these things
take 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 scooters
in a lake in Oakland, California.
Now, part of the reason they're breaking so fast
is that these scooters were never meant
to be used this way.
The electric scooters that Bird deployed,
at least initially, were rebranded Xiaomi devices
intended for use by a single owner
with 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 money
off of scooters has his doubts.
A top executive at Segway-Ninebot,
which sells its scooters to the ride-sharing companies,
questioned in a recent interview
whether scooter-sharing was a sustainable business.
So how can scooter-sharing startups
turn these grim numbers around?
Well, thanks to the millions of dollars
pumped into electric scooter companies
by venture capitalists, they may not have to.
At least, not right away.
Investors are betting that these companies
will be worth billions of dollars
once 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 me
that in order for his company
to eventually break even,
the scooters will need to increase their lifespan
to 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 collaboration
with 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 mechanisms
and field-swappable batteries
that can help reduce the daily wear and tear
on these scooters.
Will these new, more rugged scooters last longer?
Probably, but they'll unquestionably
be more expensive to manufacture,
which means they'll need to stay in operation even longer
before the companies can begin to recoup their costs.
It's a Catch-22, and it's not entirely clear
that the scooter startups have a solution.
And in the end, it may not just be the scooters,
but the companies themselves
that 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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on YouTube.com/TheVerge.