How to Start an Electric Scooter Rental Business in 2023

May. 06, 2024

How to Start an Electric Scooter Rental Business in 2023

What is the profitability of the Scooter Sharing Business?

From an economic point of view, e-scooter rental is a profitable business. From the point of view of absolute income numbers, it’s rather small. Let's try to roughly calculate the profitability of the e-scooter business.

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All calculations are made on the example of a scooter sharing business with a fleet of 50 scooters, the location of the business is a US city with a population of 230,000 people. Calculations of expenses and income of the scooter sharing business are approximate and we did not take into account a number of factors (competition, level of vandalism, local fees and charges), which may affect the success of this business.

Business start-up costs

It takes 2 months to start an electric scooter sharing business if you decide to use a franchise from RexSoft. If you have decided to develop scooter rental software "from scratch" - the term of starting a business may increase to 3-5 months. During the start-up period, your business will not generate income, because first you need to register the business, set up the necessary software, purchase scooters, find premises, etc. Next, we've collected the main costs you need to be prepared for at the start-up stage.

Costs Description Total,$ Small business registration Legal consultations. Obtaining a tax registration number. Registration with the social insurance authorities. Obtaining a license/permit. Opening a bank account. 100-1000 Purchase of scooters The cost is calculated based on the example of buying 50 Shenzhen X890 scooters, which have proven themselves well in the scooter sharing business. 32500-40000 Spare parts for scooters Replacement batteries. For 50 scooters, 120 batteries are required. Headlights, stops, wheels, humpers, brake systems, other parts with high wear and tear. 12000-14000 Electric scooter sharing software The cost is calculated for the customization and setting up of the necessary electric scooter sharing software (client app, and CRM for managers) according to the terms of the franchise from RexSoft. More information about the cost of the franchise here 5000-7000 Purchase of cars for chargers A cargo van is required for a scooter sharing business. For example, we found out the cost of the used (from 2017) and new van - Transit Van. All information is taken from the site 22000-50000

So, the costs of starting an electric scooter sharing business can be $70,000-110,000.

Business expensess

After the launch, your business will start to work and generate income for you, and to support the electric scooter sharing business, you need to cover current expenses: rent, car expenses, taxes, employee wages, etc. In the table, we calculated the main annual expenses.

Costs Description Total,$ Warehouse rental A room of 30-40 square meters is required for storage, maintenance of scooters (spare parts) and battery charging. The cost of renting premises in the USA is taken from the site 15000-25000 Car expenses Expenses for gasoline, spare parts, technical service 15000-20000 Software fee Monthly franchise payment for the use of the necessary software 3600 Insurance Property and general liability insurance 500-1000 Update of spare parts fund Headlights, stops, wheels, humpers, brake systems, other parts with high wear and tear 12000-14000 Taxes 320000-420000 Wages (charges)

2 specialists (replace dead batteries, transport scooters)
1 specialist (arranges battery charging discovers places where there is a high demand for scooters, plans scooter parking lots. Repairs scooters)
1 manager (support service, responds to queries from users (for example, our app has an "Ask questions" section where the customer can ask the support service anything in real-time).

190000-240000 Accounting, legal services Providing legal advice, bookkeeping and reporting 7000-12000

The annual costs of running an electric scooter sharing business can be $550,000-700,000.

Income of the electric scooter sharing business

The cost of renting a scooter consists of an unlocking fee of 1 USD and a rate per minute - 0.15 to 0.30 USD. Weather conditions (temperature must be above 0) in the USA allow electric scooter sharing business from March to November (270 days). We subtracted 15% from the season for days with bad weather (rain) when city residents prefer other means of transport. So we have 230 days. From the experience of our customers, we know that 1 scooter can bring from 70 dollars a day. 50 scooters can bring in a season from $100,000 monthly income, or $1,200,000 per season.

So, the electric scooter sharing business is a highly profitable type of business, because in our case, the income from renting 50 scooters allows to return the initial investment for starting the business ($70,000-110,000) and cover the main current costs of running it ($550,000-700,000) per season.

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E-scooter business is quite easy to create. You just need a few scooters, a quality application, and a good location to get a flow of customers. The key is to have the right people to help you figure it all out and make your business truly competitive. Contact RexSoft now and we will work with you to make your city's residents more mobile and you truly successful.

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A scooter company is… profitable?

Even by the fail-fast, break-things standards of Silicon Valley, Lime’s prospects for long-term success appeared outrageous.

Founded in 2017, the company littered cities with expensive but flimsy rental bikes and scooters in hopes it might gain market share over competitors like Bird, all the while alienating local governments and harming pedestrians.
In 2020, consumer scooter spending fell by ~100% amid the pandemic. People were not even renting scooters to throw them into rivers or set them on fire anymore.

Now, the scooter company — or, as Lime likes to be known, “micromobility company” — claims it had its first profitable year in 2022, according to TechCrunch.

Seriously, how did this happen?

We know. It’s wild. But Lime has found success improving its unit economics (i.e., making more money off every single e-bike and scooter).

The key is the battery. Last year, the company rolled out its Gen4 e-bike, which uses a swappable battery that can be replaced without having to take the bike off the street — reducing operational costs and increasing their availability to users. Lime’s scooters use the same battery.

As of last year, Lime had ~5m active users across ~200 cities.

CEO Wayne Ting told TechCrunch the company will seek to IPO in the near future.

Meanwhile…

E-scooter competitor Bird, which recently merged with a Canadian licensee, is struggling. The company admitted to overstating earnings from 2020 to 2022. Unlike Lime, Bird has outsourced the development of its equipment.

Since going public through a SPAC in 2021, Bird’s stock has fallen from a peak of $8.40 to ~$0.20.

Things have gotten so grim for Bird that the company is seeking unpaid funds from past customers who owe less than $1.

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