In The Last-Mile Race, It’s the Technology Not How You Pay for It That’s Powerful

Anyone who’s been even a casual observer of the news cycle these days will recognize “rideshare” and “scooter share” as buzzwords of the year. Between media experts and industry analysts, the narrative seems to be that the solution to the last mile transportation problem is ride-sharing. Moreover, these folks claim that the vehicle ownership model is dead, and no one will ever buy a vehicle again! But, they’ve missed the real headline here.

The story isn’t about a battle between owned versus shared business models—it’s about introducing technologies that can address accelerating urbanization and reclaim the large chunks of our time and money currently wasted by commuting in a car-based model that has ceased to be functional. In short, it’s about the race towards innovative, street-grade light electric vehicles that actually solve the last mile transportation problem currently plaguing our cities.

Would you talk about the iPhone this way?

Think of it this way: if the iPhone launched today, would the headlines skip past what a smartphone is and does, and proclaim low monthly payments and family plans as the life-changing element? Absolutely not. The technology—the anywhere, anytime communication afforded us by phone, the frictionless access to easy banking, streaming in-your-palm music, and the onslaught of social media at your fingertips—is what fundamentally revolutionized the way we interact with the world.  The core contribution was the phone and the technology itself, not the detail of whether you bought the phone or rented it!

Ownership isn’t dead—it’s still the overwhelming majority of vehicles

People are adopting lightweight electric vehicles at an enormous rate. Thankfully, after years of auto-based gridlock the consensus is forming that in order to ease congestion and reduce commute times we must get more cars off the road, get more people on public transit, and make more lightweight vehicles accessible. Until recently, the primary mindset of investors was that bike and scooter share was the answer and would be the vast majority of vehicles out there. In reality, the recent events surrounding bike share in China and the challenges for electric bike and scooter share in the US and Europe, have illustrated these models are severely challenged when it comes to economics, safety, and sustainability.  Now, the ownership model is emerging as the more dominant model, and here’s why:

Who’s owning and who’s sharing: Cars, Bike Share & E-scooters

Car Ownership: By the Numbers

  • $3 trillion. That’s global consumer car sales each year. And yet, Uber, the largest car share company, reported about $12 billion in revenue last year. If you add up total rideshare combined, including taxis which are still responsible for two-thirds of all rideshare, annual revenue reaches a mere $150 billion per year—small in comparison to ownership!  
  • Furthermore, 99% of miles driven by cars annually are miles driven in owned vehicles, not shared or rented.

Dockless Bike Share & E-scooters: By the Numbers

  • Globally, annual bike sales are ~$32 billion.  About $5 billion+ of that is in the US alone.
  • In 2017, the number of bike share bikes in the U.S. more than doubled—from 42,500 bikes at the end of 2016 to approximately 100,000 bikes by the end of 2017. That’s half of one percent of just 2017 consumer bike sales alone. Compared to bike ownership, it is very small.  And, the share bikes averaged about 1 ride per vehicle per day. At about $1.50 per ride, the revenue is quite small..
  • Electric scooters are already a $15 billion industry, just $3 billion of which are “foldable” scooters including  stand up scooters. By comparison, in 2018, about 85,000 e-scooters were available for public use in about 100 U.S. cities.
  • Globally, scooter share has supported 38.5 million rides in 2018, generating approximately $100M in revenue annually.  Compared to even the $3 billion annual market for foldable scooters, it’s still a very small albeit growing sliver of the pie.

This isn’t to say the share model isn’t needed. It’s merely serving a small percentage of the market need

Most travel can be grouped into two big buckets: routine travel, such as commuting, running errands, and going to school, and ad hoc travel, such as heading to a bar or restaurant, traveling in a city where one does not live, or going across town for a meeting after you parked your car.

Ride-sharing is a great solution for ad hoc travel.  It’s available spur-of the-moment, and you don’t need to worry about parking. But, it can cost you:

  • The average car ride share is $22 per ride (that’s per ride, not per day…), or about $2 per mile
  • The average e-scooter trip costs $4.80.  (again per ride, not per day…)
  • Multiple trips per day versus round trip starts to get really expensive.

In contrast, the vast, vast majority of travel is routine.  For routine travel, the most important things are instant and reliable availability, and the ability to go places for pennies or dimes per mile, not dollars. In which case, ownership is overwhelmingly better than renting!

So, why own? It’s simple.

  1. Safety First.  The data on safety issues associated with scooter-share is concerning. In contrast, owned light vehicles tend to be much safer than shared vehicles for several key reasons:
    • People who own a vehicle (and hence know they will be riding) are far more likely to be wearing a helmet.  A recent CDC study based on scooter share revealed that 45% of scooter share injuries are head injuries, and 95% of those riders were not wearing a helmet.
    • People who own virtually any vehicle (car, bike, scooter….) learn how to operate it before going out in traffic! The same CDC study shared that 1 in 3 people injured in scooter share were on their very first ride, and 63% of them had ridden less than 10 times.
  2. Quality & Reliability. It’s well understood and acknowledged that scooters operated by scooter share companies are not vehicle-grade.They lack the acceleration and braking power, hill climbing and descending ability, mechanical, electrical, and environmental durability to operate as a vehicle in a real street environment.  They’re working on it, but they still have a ways to go. To be fair, most scooters for sale for ownership are no better, as they are essentially the same vehicles, made by the same handful of manufacturers.  Further, most scooter-share scooters are charged every night and redistributed by gig economy workers, and so the chain of custody to ensure a well-maintained vehicle is difficult, and it is hard to flag vehicles with issues to their safe operation. By contrast, owned vehicles tend to be better maintained, and people who buy are usually more motivated to look for safety and durability in their purchase.
  3. Economics.  If you’re a regular user, it’s more cost effective to own a scooter or e-bike rather than rent any form of vehicle. Owning a vehicle-grade, high-quality electric vehicle costs about $2 per day, no matter how many miles you ride. As shared above, ride-share tends to be dollars per mile, and so massively more expensive for day-to-day use. Think about it this way: if owning an electric scooter will replace about 3 car-share rides per month, or half a dozen round-trip scooter rides, you’re better off buying one.

Boosted is one of the original micro-mobility players, and a manufacturer of high-quality vehicles that last for years.

We’ve always known what everyone is just starting to understand: the last-mile revolution is about bringing vehicle-grade light electric vehicles to the masses, and getting people out of cars to free up our city streets and free up our time. Whether people own a vehicle, rent a vehicle, or both, the important thing is that they adopt these new technologies.  And, it is critical that the providers putting these vehicles out on the streets ensure these vehicles are vehicle-grade and up for the job. 

Words by Jeff Russakow, CEO, Boosted, Inc. 

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