Operating Costs of Bike Rental Operations

Goals

To determine the operating costs of major bike rental operations, like Lime and Bird, in North America. The information should include the cost of charging and charging related expenses.

Early Findings

Operating Costs

  • In 2019, Lime was expected to post an operating loss of over $300 million. This is against a gross revenue of $400 million. Despite solid growth, there are still questions about whether their model of business is sustainable.
  • Bird had similar results recording a $100 million loss against revenue of $15 million in the first quarter of 2019, although admittedly write-offs and seasonality played a role in this.
  • It was reported Lime told investors in July, "it spent about 35% of gross revenue on depreciation, 40% on local operations, and 17% on charging. Other smaller costs include payment processing, customer support, and insurance."
  • Both Bird and Lime have struggled to cover the costs of vandalism and depreciation of their scooters. The average lifespan of the scooters is two months.
  • The small battery size and low electricity costs mean that the average bike costs less than $0.10 per charge. As the quality of the bikes improves, maintenance costs should fall to around $0.19 per mile. Extending the life of the bike to a year will yield $0.24 in savings per mile. If the lifespan were to decrease to one month, the cost per mile would increase to $4.40.
  • Quartz has estimated the average lifespan of a scooter to be just 28.8 days. Bird needs five rides per day at the cost of $5.25 per ride to recover the cost of purchasing the scooter. The average trip is 18 minutes. The scooters average 3.49 rides per day. This means each scooter makes $12.91 in revenue per day.
  • The cost breakdown includes charging costs of $1.42 per ride, repairs of $0.51 per ride, credit card fees $0.41 per ride, customer support $0.06 per ride, and insurance $0.05 per ride. This adds up to costs of $2.75 per ride.
  • In addition to these costs, some cities require the company to pay a probationary license fee, along with additional licensing costs, cities charge a fee for the docking stations, each vehicle, and per designated group parking area.

Summary

  • In our first hour of research, we have found some details around the operating costs of bike rental operators in North America. There appears to be a considerable amount of data available that provides details of not only costs but some of the difficulties associated with the business model that Lime and Bird have adopted.

Proposed next steps:

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