Will EBikeshare Replace EBike Ownership For Most People in Cities?

[Asher]

I can see ebikeshare working only in cities that have a large tourist sector. The largest growth sector for ebike users will be commuters and retirees that want to get some exercise while going about their daily routines. These people need to have the convenience of being able to wheel their bike out of their garage rather than walking or getting a bus to the nearest ebikeshare location. They want to know that the battery is fully charged/ bike is fully maintained and not take the risk of being stranded. Like with there recently abandoned cars, they want their personal transport to be as they like it. Seat in same position, grips, handlebars and brakes to feel the same, fully familiar with controls. And of course there is the vanity of being seen on their ebike. I can see growth in both ebikeshare and personally owned ebikes but for different reasons and with different sectors of society.

Nope. $1 ebike rides in Sacramento for 15 minutes or less, good for a couple miles. $30 for 60m a day. Cheaper than owning your own ebike.

 

[Asher]

Lime Bike just invaded Honolulu with its electric scooters

How many people were killed?

 

[Barry S]

How many people were killed?

LOL. Zero so far. If you listen to our Mayor you'd think he just saved us from WMDs.

 

[Mr. Coffee]

@Asher

You are obviously a passionate advocate for e-bike sharing services. This afternoon I put my venture capitalist hat on and am trying to understand how e-bike share would work as a business. So please bear with me and help me answer these questions:

(1) In a previous post, you postulated needing 100k electric bikes for New York City to provide adequate coverage. Even at a very generous price of $500 per bike, that is $50 million worth of bicycles. Who is going to put up the capital to purchase those bikes, and how are they going to be paid back?

(2) With just a quick bit of research, I found that typical e-bike rentals are from $50 to $100 per day. Most e-bike share schemes seem to me to cost out at less than half that, and sometimes much less than half. Bicycle rentals in general are not a very high profit margin business. So what secret sauce is there that makes an e-bike share business sustainable at those very low prices?

(3) There seems to me to be a tradeoff between availability and utilization. You would obviously generate the very highest return on your investment of e-bikes if you had very high utilization. However, at very high utilization rates there wouldn't be very many e-bikes available and you would miss out on customers. So how do you figure out the optimum number of bikes for a given market?

(4) How is an e-bike sharing service staffed? How many people do you need servicing bikes and the like? If you even need one person per 100 bikes in your NYC scenario you would end up with one thousand employees. Even assuming very modest salary and overhead costs that would still need to be well north of $50 million per year just on labor costs. For the record I consider those numbers to be wildly optimistic.

 

[MisterM]

@Asher

You are obviously a passionate advocate for e-bike sharing services. This afternoon I put my venture capitalist hat on and am trying to understand how e-bike share would work as a business. So please bear with me and help me answer these questions:

(1) In a previous post, you postulated needing 100k electric bikes for New York City to provide adequate coverage. Even at a very generous price of $500 per bike, that is $50 million worth of bicycles. Who is going to put up the capital to purchase those bikes, and how are they going to be paid back?

(2) With just a quick bit of research, I found that typical e-bike rentals are from $50 to $100 per day. Most e-bike share schemes seem to me to cost out at less than half that, and sometimes much less than half. Bicycle rentals in general are not a very high profit margin business. So what secret sauce is there that makes an e-bike share business sustainable at those very low prices?

(3) There seems to me to be a tradeoff between availability and utilization. You would obviously generate the very highest return on your investment of e-bikes if you had very high utilization. However, at very high utilization rates there wouldn't be very many e-bikes available and you would miss out on customers. So how do you figure out the optimum number of bikes for a given market?

(4) How is an e-bike sharing service staffed? How many people do you need servicing bikes and the like? If you even need one person per 100 bikes in your NYC scenario you would end up with one thousand employees. Even assuming very modest salary and overhead costs that would still need to be well north of $50 million per year just on labor costs. For the record I consider those numbers to be wildly optimistic.

Bike share seems destined to fail as mass transit- look at the disaster unfolding in China. Literally millions of ebikes are being scrapped - most are new or almost new. Clogging up every available sidewalk and people treat them worse than garbage - just dump them anywhere.

Not a chance ebikes will rent for $50-$100 day on a sustainable basis - Avis will rent you a car for far less. Maybe $10 might be more realistic.

 

[Mr. Coffee]

...
Not a chance ebikes will rent for $50-$100 day on a sustainable basis - Avis will rent you a car for far less. Maybe $10 might be more realistic.

Yet if you look at any of these links that is the prices that you see:

https://ebikestore.com/rentals/

http://sandiegoflyrides.com/bike-rentals/

http://ebikes2you.com/ebike-rentals/

Also, when I check Expedia Avis's rates bottom out over $50 per day. That hardly qualifies as "far less".

 

[Dynamo Dan]

Nope. $1 ebike rides in Sacramento for 15 minutes or less, good for a couple miles. $30 for 60m a day. Cheaper than owning your own ebike.

The only way that an ebikeshare program can work is if there is high tourist traffic. The only sustainable alternative would be the commuter market. So lets use your figures and say that you can rent a bike for $50 per day. That's $250 per week or $1000 per month. Purchasing your own ebike costs $2000. The cost of buying can be recouped in 2 months as opposed to ebikeshare. The only advantage that ebikeshare has for the commuter is that they don't have to store or maintain it.

 

[Asher]

The only way that an ebikeshare program can work is if there is high tourist traffic. The only sustainable alternative would be the commuter market. So lets use your figures and say that you can rent a bike for $50 per day. That's $250 per week or $1000 per month. Purchasing your own ebike costs $2000. The cost of buying can be recouped in 2 months as opposed to ebikeshare. The only advantage that ebikeshare has for the commuter is that they don't have to store or maintain it.

I didn't use those figures. Mine are from here: https://jumpbikes.com/cities/sacramento/ The CEO has said the bikes are $1000 each wholesale. The $1 price is for a city where rides have been subsidized albeit no more than public transit, and potentially a lot less (it's a little hazy right now).

@Asher

You are obviously a passionate advocate for e-bike sharing services. This afternoon I put my venture capitalist hat on and am trying to understand how e-bike share would work as a business. So please bear with me and help me answer these questions:

(1) In a previous post, you postulated needing 100k electric bikes for New York City to provide adequate coverage. Even at a very generous price of $500 per bike, that is $50 million worth of bicycles. Who is going to put up the capital to purchase those bikes, and how are they going to be paid back?

(2) With just a quick bit of research, I found that typical e-bike rentals are from $50 to $100 per day. Most e-bike share schemes seem to me to cost out at less than half that, and sometimes much less than half. Bicycle rentals in general are not a very high profit margin business. So what secret sauce is there that makes an e-bike share business sustainable at those very low prices?

(3) There seems to me to be a tradeoff between availability and utilization. You would obviously generate the very highest return on your investment of e-bikes if you had very high utilization. However, at very high utilization rates there wouldn't be very many e-bikes available and you would miss out on customers. So how do you figure out the optimum number of bikes for a given market?

(4) How is an e-bike sharing service staffed? How many people do you need servicing bikes and the like? If you even need one person per 100 bikes in your NYC scenario you would end up with one thousand employees. Even assuming very modest salary and overhead costs that would still need to be well north of $50 million per year just on labor costs. For the record I consider those numbers to be wildly optimistic.

Good questions

1. Uber just bought one ebikeshare for $150-200m. Limebike and Bird are valued in the hundreds of millions, Chinese firms ofo and Mobike in the billions. Plenty of capital. Investors love to throw money at you when you have an asset generating income for four years that pays itself off after 6 months (sorta making up numbers there).

2. You're comparing a low utilization, high 'touch' storefront to a high utilization, lower touch model. It's a little like checking a book out of a library vs reading wikipedia .

3. Yes, there is a tradeoff, but you do need some slack to grow utilization, else people will abandon it if they can't rely on it. Where that optimal point is, companies are figuring out. One critical metric is % of app openings with a bike within say, a quarter mile (around a 5 minute walk). If all the bikes are aggregated into one app, and it gets 1-2%+ share of all trips, you could have a bike on every block.

4. I don't know the staffing levels, that's a very relevant question. The ebike itself is priced at $2 a ride, gets 3+ rides a day. If it has a 4 year lifespan, that's nearly $8,800 for a $1000 bike. This planner (who hates dockless bikeshare) quotes a figure of 1 staff per 50 bikes* but I'm guessing that's very conservative. I imagine there are great economies of scale here, i.e. supporting 10k bikes is far less than 10x the cost of supporting 1k bikes.

https://www.citylab.com/transportat...rogue-bike-shares-run-wild/530664/#footnote-1

All that said, the industry in total will not pull a profit this year, and probably not next year, amidst putting up with screwy city regulations, initial customer acquisition, and cutthroat competition. And future vehicle development costs.

Scooters are priced at $1 + $0.15/min, and are allegedly profitable already in some markets (Santa Monica, San Diego). Though I think ebikes will take a big chomp out of them.

After following the sector closely, I increasingly think ebikeshare will win out, except for long distance commuters (say, 5+ miles). No security or parking concerns, and cities are starting to show a willingness to subsidize bikeshare (though also ebike purchases) as they do with transit, for the same and more benefits.

 

[Dynamo Dan]

Your opening post assumed that there would be an ebike within 3 minutes walk and the city that you have referenced in this thread is Sacramento, Cal. Average walking speed is 0.6 miles in 10 minutes. So in any one direction a person can walk an area of 0.16 square miles in 3 minutes. Sacramento covers an area of 100 square miles so you would need 625 locations for your ebikes to cover the city. I love your enthusiasm for the idea but the math doesn't stack up. You would have to locate these stations where people live not where they work (otherwise why would they need the ebike in the first place?). Ebikeshare programs might work in Europe, but you have to remember that European cities are older and more dense than North American cities. The central thrust of the argument for ebikeshare programs is that the cost of buying an ebike is expensive. Having done some math, buying an ebike will pay for itself after 2 years compared to fuelling up my car, using the public transit or using ebikeshare. It is also more convenient than the later 2 options. There is a place for ebikeshare programs but only a few markets in N America could sustain a program.

 

[Asher]

Bike share seems destined to fail as mass transit- look at the disaster unfolding in China. Literally millions of ebikes are being scrapped - most are new or almost new. Clogging up every available sidewalk and people treat them worse than garbage - just dump them anywhere.

Not a chance ebikes will rent for $50-$100 day on a sustainable basis - Avis will rent you a car for far less. Maybe $10 might be more realistic.

China's bikeshare has higher utilization than every bikeshare in America besides NY and DCs. In the late 90s there was an internet bubble. And then the internet vanished, right...

Your opening post assumed that there would be an ebike within 3 minutes walk and the city that you have referenced in this thread is Sacramento, Cal. Average walking speed is 0.6 miles in 10 minutes. So in any one direction a person can walk an area of 0.16 square miles in 3 minutes. Sacramento covers an area of 100 square miles so you would need 625 locations for your ebikes to cover the city. I love your enthusiasm for the idea but the math doesn't stack up. You would have to locate these stations where people live not where they work (otherwise why would they need the ebike in the first place?). Ebikeshare programs might work in Europe, but you have to remember that European cities are older and more dense than North American cities. The central thrust of the argument for ebikeshare programs is that the cost of buying an ebike is expensive. Having done some math, buying an ebike will pay for itself after 2 years compared to fuelling up my car, using the public transit or using ebikeshare. It is also more convenient than the later 2 options. There is a place for ebikeshare programs but only a few markets in N America could sustain a program.

It's just funny to me when you and others speak with so much certainty that something is impossible when leading companies are committing to the opposite.

They're putting out 900 bikes eventually in Sac. You don't need 100% coverage to be viable, far from it. There are no stations as such. And even Americans do lots of trips that are 3 miles or less, I think it's 40% or so.

 

[Mr. Coffee]

@Asher

Thanks for the answers. I'm going to restructure my questions to make them more specific and then add on some additional questions that are generated by those questions and your answers. What I'm trying to do here is map out what you have to know to know how to make ebikeshare viable. I myself don't know whether it is or not, and I am dispassionate about it.

Telling me that other investors are investing in ebikeshare tells me exactly nothing. Any look at history shows a lot of very intelligent investors making abysmal investment choices. There is also a very strong herd effect in investing where if your competitors are investing in X you feel obliged to as well both to appear "current" and for fear of missing out on something. Note that herd effect can push a lot of people over the cliff at the same time (e.g. 2007-2008 financial crisis).

(1) How much will the bikes cost? What are reasonable lifespans for the bikes and batteries?

(2) How many hours in a 24-hour day are you expecting/assuming these bikes will be used? Is there some operations model you can point to that would give us a baseline for understanding usage?

(3) How many bikes do you need per 100,000 population to achieve adequate coverage? How many bikes does it take to achieve saturation (where adding more bikes doesn't increase the total usage hours)? How does usage change as more or less bikes are available?

(4) How many labor hours are required per hour of bike usage?

Those four questions, IMHO, encapsulate the bare minimum you would need to know to understand the viability of an ebikeshare service in a given city. Anything less and you are just putting your money on a roulette wheel.

There are a number of deeper questions that thinking about the above also raise:

(1) How will usage vary seasonally? You can't tell me with a straight face that you will have equal usage in a New York summer as a New York winter. Or conversely people will ride more during the cooler winter months in Tuscon than they will in the baking hot summer.

(2) Will usage patterns be symmetric? Can you safely assume that if a bike is shared from A to B that at some point another trip will originate at point B? While that seems a reasonable assumption the details get thorny very quick. Maybe it is cold and rainy in the morning so people take an Uber but people ride a bike in the afternoon. Maybe variations of terrain or traffic making riding bikes appealing in one direction but not the other. I don't know. I doubt anyone knows very much.

(3) Batteries are well-known to have a limited lifespan (with respect to charge-discharge cycles). Also, completely discharging a battery or using (or even storing one) in very cold or hot conditions can massively shorten battery life. How do you deal with that? Battery cost is a significant fraction of the initial investment and if you blow through batteries too quickly you cannot possibly have a sustainable business.

(4) What is the charging infrastructure? You seem to like dockless but to me that implies you need a small army of dudes in vans going around swapping out batteries on bikes. How often will you have to recharge or replace batteries? How will they find the bikes and know their battery status? Even with very high-end bikes with very expensive battery packs on low levels of pedal assist you are very challenged to get much more than six or seven hours of ride time. And of course that is with shiny new batteries in optimal temperature conditions.

 

[Asher]

@Asher

Thanks for the answers. I'm going to restructure my questions to make them more specific and then add on some additional questions that are generated by those questions and your answers. What I'm trying to do here is map out what you have to know to know how to make ebikeshare viable. I myself don't know whether it is or not, and I am dispassionate about it.

Telling me that other investors are investing in ebikeshare tells me exactly nothing. Any look at history shows a lot of very intelligent investors making abysmal investment choices. There is also a very strong herd effect in investing where if your competitors are investing in X you feel obliged to as well both to appear "current" and for fear of missing out on something. Note that herd effect can push a lot of people over the cliff at the same time (e.g. 2007-2008 financial crisis).

(1) How much will the bikes cost? What are reasonable lifespans for the bikes and batteries?

(2) How many hours in a 24-hour day are you expecting/assuming these bikes will be used? Is there some operations model you can point to that would give us a baseline for understanding usage?

(3) How many bikes do you need per 100,000 population to achieve adequate coverage? How many bikes does it take to achieve saturation (where adding more bikes doesn't increase the total usage hours)? How does usage change as more or less bikes are available?

(4) How many labor hours are required per hour of bike usage?

Those four questions, IMHO, encapsulate the bare minimum you would need to know to understand the viability of an ebikeshare service in a given city. Anything less and you are just putting your money on a roulette wheel.

There are a number of deeper questions that thinking about the above also raise:

(1) How will usage vary seasonally? You can't tell me with a straight face that you will have equal usage in a New York summer as a New York winter. Or conversely people will ride more during the cooler winter months in Tuscon than they will in the baking hot summer.

(2) Will usage patterns be symmetric? Can you safely assume that if a bike is shared from A to B that at some point another trip will originate at point B? While that seems a reasonable assumption the details get thorny very quick. Maybe it is cold and rainy in the morning so people take an Uber but people ride a bike in the afternoon. Maybe variations of terrain or traffic making riding bikes appealing in one direction but not the other. I don't know. I doubt anyone knows very much.

(3) Batteries are well-known to have a limited lifespan (with respect to charge-discharge cycles). Also, completely discharging a battery or using (or even storing one) in very cold or hot conditions can massively shorten battery life. How do you deal with that? Battery cost is a significant fraction of the initial investment and if you blow through batteries too quickly you cannot possibly have a sustainable business.

(4) What is the charging infrastructure? You seem to like dockless but to me that implies you need a small army of dudes in vans going around swapping out batteries on bikes. How often will you have to recharge or replace batteries? How will they find the bikes and know their battery status? Even with very high-end bikes with very expensive battery packs on low levels of pedal assist you are very challenged to get much more than six or seven hours of ride time. And of course that is with shiny new batteries in optimal temperature conditions.

Bikes cost $200-600 if not electric, $600-1000 if electric. Firms tend to start with 1 bike per 100 people and increase as consumer demand dictates. Don't know the labor ratio per bike. Sure, bike use dives 50% or so in winter depending on the location, you adjust your models for that.

There's definitely some asymmetry to trips, though having more bikes as slack in the system can help with that. There's also rebalancing via labor but that's pricey. You can also incentivizing users to rebalance, see the bike angels program by Motivate.

You do have an army of people swapping out batteries, or bringing scooters home to charge them, or incentivizing riders to bring them back to a charging hub. The future may well be users carrying theirown small batteries, like a portable cell phone charger. BYOB. That solves the battery and weather issue you mention. And possibly even the asymmetry. Im curious as to how they'll insulate batteries otherwise.

As for investors, they are seeking high returns with high risk, so they're not going to wait until every kink is worked out but actively try to solve them, aka venture capital. If you wait until the kinks are worked out the high returns are gone. It may be a bubble but it's not a fad when you have a product providing real value and the unit economics are there.

 

[Dewey]

Ofo and Mobike dockless pedal bikeshare have stopped operating in the District of Columbia. With the success of Bird e-scooters, and their uninvited expansion across the Potomac to Arlington, VA, the remaining DC players Lyft/Motivate, LimeBike, and Uber/Jump, are also adding e-scooter fleets, and Arlington will follow DC by starting a dockless trial in September.

 

[ebikemom]

[QUOTE="In trying to find and rent a bike so I could go bike riding with them, we literally had to search all over the neighborhood for a properly functioning bike. Most of them had something wrong with them, usually broken spokes from people forcing the wheel through the lock. Many of the "available" bikes were in fact not available because people kept them inside their homes even when not paying to ride them. The sixth or seventh bike we found was rideable, just barely. The quality of the ride was poor, to be charitable.
.[/QUOTE]

There was just an article in the Seattle Times on this--only 60% of available bikes were ride-able, and a good number of e-bikes were not charged. I can't imagine having to rely on a bikeshare bike. People who need reliable transportation will own their own bike, methinks, and I think as ebikes proliferate there will be more dealers, more shops that fix them, more brands with solid customer support, etc.

 

[tomjasz]

Interesting, except for a handful of states the rest of us have winter. Bike riding drops precipitously, and becomes adventure capital. ‘Merkins are not a likely successful market.

 

[harryS]

In Minneapolis and Chicago, the pedal bikes are rented for 45 minutes per ride. Monthly lease rates for commuters are far better, as is a one day rate, but they must get the bulk of their money from tourists as the rate escalates past 45 minutes, unless you can dock it. If you don't dock/lock, you just bought the bike on your credit card. A plan that mandates responsibility.

Vendors are trying to get Chicago to accept a dockless bike rental system, but look at what happened in DC with the Lime e-bikes. In the big cities, people will ruin any system where honesty is expected.

 

[fnkyhd]

limebike has a lot of ebikes here in Seattle. honestly that's what got me interested in buying one. it was costing me about $10 per hour riding the elime bikes around which was adding up quickly so I bought my own.

 

[Dewey]

Lyft/Motivate are adding 80 ebikes to the DC Capital Bikeshare fleet tomorrow, same design as San Francisco’s Ford GoBike+ instead of the 3-speed IGH on the pedal bikeshare bike WTOP report it has an “infinity gear” presumably a CVT (https://wtop.com/dc-transit/2018/09/...pilot-program/)https://www.washingtonpost.com/news...l-bikeshare-this-week/?utm_term=.4587998b44ad

 

[Dewey]

Ofo and Mobike dockless pedal bikeshare have stopped operating in the District of Columbia.

Ofo donated useable pedal bikes to a local cycling non-profit which sold them a week ago for $100, several are now on Craigslist Baltimore for $200, a cheap donor bike for a DIY mid-drive conversion.

 

[Nova Haibike]

Ofo donated useable pedal bikes to a local cycling non-profit which sold them a week ago for $100, several are now on Craigslist DC for $200, a cheap donor bike for a DIY mid-drive conversion.

That was my co-op. Not only were the bikes useable, they were brand-new, in-the-box bikes. They had more bikes as well, which they donated to another non-profit here in the area.