The mobile sharing industry is projected to grow at a rapid rate over the next several years. The economic shift towards micro mobility has shown that bike and scooter use is going to grow from USD $2.5 billion in 2019 to USD $10.1 billion by 2027. With an increasing demand for affordable mobility services, industry leaders are making adjustments to their financial models to accommodate changing regulations, as well as, growing production costs.
We put together a breakdown of the expenses that are currently going in to establishing a profitable MaaS company along with some other considerations to keep in mind.
What are the current pricing levels for leaders in Scooter and Bike Sharing?
The pricing levels for different services being offered around the world vary based upon initial upfront costs, cost per allotted time and total ride duration. These prices are also subject to change depending on the regulatory requirements of each location.
At ATOM Mobility we have a specific calculation to determine the total income a scooter or bike sharing service makes based on ride time and pricing fees. This allows adjustments to be made for the different price levels each company offers.
Income Equation: (Unlock Fee + (Average Ride Time X Minutes)) = x
x = Average Price per Ride
How does vehicle ridership impact the financial model?
Ridership is impacted by a multitude of factors, including availability to travel lanes, density of charging/docking stations, level of integration within the overall transportation network, along with the extent of rider outreach and vendor education. Vehicle use rates tend to increase based on volume of available scooters/bikes and ease of access to stations. The systems with larger fleets, as well as wider spread sharing infrastructure tend to experience higher ridership.
According to research conducted by the National Association of City Transportation Officials, scooters are making up to two times more rides per vehicle per day compared to bikes. Bike services complete anywhere from 0.5 to 2.5 rides per day at an average of 1, with trends showing a shift away from traditional pedal bicycles as the interest in e-vehicles continues to grow.
Image source: nacto.org
The region where services are being offered can also influence ridership. Across our partners at ATOM Mobility for scooters, we are seeing from 1.8 to even 5 rides per vehicle per day, with even higher rates in colder regions where the proper infrastructure is in place.
Image source: City of Chicago, E-scooter Pilot Evaluation
An evaluation of the City of Chicago’s E-scooter pilot program found that over time the number of trips per day decreased from an average of 3.7 to 2.5. This aligns with the seasonality of mobility vehicles, which has been proven to impact ridership. Our research found that there can be decreases between 30 to 50 percent during the off-season.
The average rides per day you can count on for bike sharing services is 0.5 to 2.5, and 1.8 to 5 for scooter sharing services.
What additional factors need to be taken into consideration?
Once we have determined how many rides are being taken and the average price, we can calculate the average income per vehicle per month and outline cost positions. To begin growing revenue, mobility companies need to determine ways to extend the lifespan of their vehicles or off-set the costs once the limit is met. These factors are a major component in developing a successful financial model. In addition, it’s important to review the other expenses that impact vehicle maintenance and usage when constructing an accurate forecast.
Seasonality refers to the time of year a service operates as a result of environmental or weather factors. For mobility services, the usage season usually begins when the average temperature in a month is +10 Celsius or more.
Rides Per Vehicle Per Day
The number of rides each vehicle is taking in a day will impact both revenue but also maintenance and lifespan costs.
The rate for each ride will need to be considered when developing an overall financial plan for a company.
Maintenance Costs (ex. 13 percent of cost per ride)
Maintenance of the vehicle fleets is required and may vary depending on usage, as well as vehicle model.
Charging Costs (ex. 21 percent of cost per ride)
Whether the fleet uses docking stations or offers free floating services, the cost of charging the vehicles is necessary for continued use.
Bank Commission (ex. 3 percent cost per ride)
This includes any of the banking fees that are acquired.
Marketing (ex. 4 percent cost per ride)
Promoting the services being offered is an essential expense for business growth and expansion within the market.
Customer Support (ex. 5 percent cost per ride)
Most mobility services are offered through mobile apps that require regular support from customer service representatives to resolve customer inquiries and help with reputation management for the company.
IT System Support (ex. 5 percent cost per ride)
These services include IoT systems, sim cards, data, software and other technological requirements needed for the vehicles to operate.
Additional Costs (ex. 3 percent cost per ride)
Mobility companies like any other vehicle service are subject to additional costs such as insurance, city permits and/or other resources.
Our Excel-based Model
To help determine the overall impact of fluctuating costs for scooter and bike services, we developed a financial model that breaks down costs based on a percentage. Through this Excel-based Model we are able to maintain a proportionate evaluation of the expenses for each service.
source: ATOM Mobility
To make calculations we assume an average ride time of 20 minutes then apply that to our Excel-based Model. Costs are shown as a percent from the ride price. Since cost and prices differ country by country, this model allows for the proportions to remain the same. For accurate forecast planning, we recommend using the average of two to four rides per vehicle per day on a period of wholesale. To learn more about our model, please email us.
Where do we go from here?
Mobility as a service is expected to continue growing as additional opportunities for expansion and profitability open in the market. At ATOM Mobility, we want to help your business thrive in the exciting new world of transportation services. There has not been a better time to join other industry leaders than right now. Reach out to us today so we can start building for the future.
Click below to learn more or request a demo.
For shared mobility operators, fleet insurance should be one of the top priorities. No matter the size or composition of your fleet, having the right insurance can offer peace of mind by protecting your business from unforeseen situations
However, the insurance question can sometimes seem daunting – especially if you're new to the industry. In this article, we will explore the key things you need to know about insuring your shared micromobility fleet.
Why you need insurance
Operating a shared mobility fleet isn’t always smooth sailing. Accidents can happen – whether it's a minor fender-bender or something more severe. Insurance serves as your safety net, offering financial coverage for repairs, replacements, and even potential legal obligations after an incident.
Here are the main reasons why insurance should be one of the top priorities for shared mobility fleet operators:
Legal compliance: In many places, insurance for shared mobility fleets is a legal requirement. You probably want to comply with these regulations to avoid any potential fines, penalties – or even the suspension of your operations.
Financial security: Insurance also helps keep your business going financially, no matter what happens. Without insurance, accidents, vehicle damage, or theft can seriously impact your finances. Comprehensive insurance coverage can ensure that you're not left scrambling to cover any unexpected expenses.
Understanding shared micromobility insurance
When it comes to insuring micromobility fleets, part of the challenge stems from the fact that the market is relatively new. Some insurance underwriters avoid dealing directly with micromobility because it's seen as an unfamiliar market.
This is where brokers like Cachet and others specializing in micromobility insurance come in. They partner with various insurance underwriters to provide coverage for operators in this field.
When it comes to shared micromobility, insurance coverage generally has a twofold role: safeguarding assets and handling third-party engagement in the event of accidents.
Liability coverage: Securing third-party public liability insurance for shared mobility fleets is not just a matter of choice – in some places, it's mandated by law. This insurance serves to protect pedestrians and riders in the unfortunate event of accidents, providing financial coverage for injuries and damages that may arise. In other words, it's a safety net that offers peace of mind to operators.
When it comes to mandatory third-party liability insurance, the negotiations with the insurance company usually begin by figuring out what the local authorities require to give them a permit. After that, the insurance policy is adjusted to meet the specific demands outlined by these authorities.
Physical damage coverage: This covers the repair or replacement costs of vehicles if they are damaged due to accidents, collisions, vandalism, or theft. Depending on the policy, physical damage coverage may also extend to equipment like GPS devices, charging stations, and other hardware.
What decides your insurance premium payments?
The amount you'll pay in premiums depends on various factors that are specific to your business This includes your fleet's makeup, where and how you operate, and the level of coverage you're aiming for.
Fleet usage: The more a shared micromobility fleet is used, the more chances there are for things to go wrong. When a fleet is in high demand and used often, there's a greater likelihood that something might happen that requires insurance coverage.
Rider behavior: Insurance companies also consider the fleet's ability to predict and manage undesirable rider behavior. Reckless riding, improper parking, or violating traffic rules can significantly increase the risk of accidents and incidents. Operators that have better measures in place to anticipate and mitigate such behaviors can demonstrate a lower risk profile to insurance providers.
Value of the fleet: How much your vehicles are worth individually and as a fleet will affect how much you pay for insurance. If your vehicles are expensive, your insurance premiums will be higher because it would cost more to replace them if they get damaged or lost.
Size of the fleet: Operators can often negotiate more favorable insurance rates for proportionally larger fleets. As the number of vehicles increases, the overall expected risk is distributed and “diluted” as a result – which translates to lower premiums per vehicle.
However, some brokers like Cachet have embraced a broader approach, ensuring that smaller and medium-sized fleets can also benefit from insurance coverage.
Technology implementation: Shared mobility services that employ technologies like GPS tracking, telematics, and IoT devices can provide insurers with valuable data. This data can then help assess driver behavior and usage patterns, enabling insurers to offer more accurate and tailored premium rates. This also takes into account how simple it is for scooters to be stolen and how well the recovery processes function – which can also play a role in insurance expenses.
Where you operate: The location in which your fleet operates is another important factor. From the insurer’s perspective, different areas pose varied levels of risk. For example, urban mobility – which is associated with a higher risk of accidents – may incur higher premiums compared to vehicles used in rural areas.
Level of coverage: The level of coverage you choose directly affects how much you pay in premiums. Opting for higher coverage limits means you get more comprehensive protection, but obviously, it also means your insurance costs go up.
Choosing the ideal insurance for your fleet
Every shared mobility fleet and business is different, so your insurance needs will depend on things like the type and size of your fleet, where you operate, how much risk you're comfortable with, and of course – how much you are willing to pay.
For example, do you require coverage for specific risks, like vandalism, or perhaps your fleet is composed of premium vehicles that are more expensive? To make it more relatable, let's dive into a practical case of a shared micromobility operator's experience with insurance.
How Hoog found the right insurance with Cachet
The concept behind Hoog Mobility is to revolutionize transportation in smaller Estonian towns. They recognized the need for efficient and eco-friendly local travel and brought a shared mobility solution often seen in big cities but missing in smaller communities: electric scooters.
Cash-strapped mobility startups often worry about potential damage or vandalism happening to their shared vehicles. This concern is shared by traditional insurance companies too. As a result, these insurers might hesitate to provide coverage for shared scooters, and if they do – it's usually at a higher cost.
Faced with this challenge, Hoog initially operated without insurance due to the steep expenses. But that changed when Cachet provided them with a customized insurance solution that perfectly suited the company's needs. Hoog also realized that the initial worry about vandalism wasn't as much of an issue as they thought. But still – having insurance for their fleet turned out to be a sound financial decision that gave them peace of mind.
Don't underestimate insurance – it's just as crucial as having a top-notch fleet and solid software. Insurance is best approached proactively – discovering you've cut corners after an unforeseen event will cost you significantly more.
Getting insurance for shared micromobility might be a bit trickier since it's still a new concept, but we've seen that even smaller fleets can make it work – it's just a matter of finding a suitable partner who understands your needs.
At the end of the day, insurance isn't merely about meeting legal requirements – it showcases your dedication to safety, responsible operations, and the well-being of everyone involved in your mobility business.
Shared mobility is gaining momentum – offering prospects for reducing traffic, cleaning up city air, and providing users with more flexible transportation options. However, despite its potential, shared mobility often seems to take a backseat to traditional public transportation and private vehicles in the eyes of local authorities and infrastructure planners.
Experts see shared mobility as a game-changing revolution in transportation. It surpasses the earlier revolution of the 20th century when personal cars became widely affordable and accessible. Now, with the rise of shared mobility and environmental concerns, the old notion of "one car per person" is becoming outdated.
In light of this, authorities worldwide should proactively prepare for a future where shared mobility plays an increasingly significant role. In this blog post, we'll explore different ways authorities and legislators can encourage shared mobility – and why it's totally worth it.
The positive impact of shared mobility
Shared mobility has the potential to fix some of the problems we face with transportation today, benefiting users, cities, and the environment. Here are the key benefits of shared mobility:
- Reduced congestion: Shared mobility can alleviate traffic congestion, leading to smoother traffic flow and shorter commute times.
- Environmental sustainability: Shared mobility can reduce the number of vehicles on the road, resulting in lower greenhouse gas emissions and a smaller carbon footprint. This helps combat air pollution and mitigate the environmental impact of transportation.
- Improved transport accessibility and flexibility: Shared mobility services make transportation more accessible, especially for those without private vehicles or limited mobility options. They also offer convenient alternatives to traditional transportation methods.
Considering the urgent need to combat climate change, shared mobility holds a significant promise as a greener transportation option. The European Union's Green Deal aims to achieve a 90% reduction in transportation-related greenhouse gas emissions by 2050. Shared mobility – coupled with increased adoption of electric vehicles and a broader shift in transportation behaviors – will likely play an important role in achieving this goal.
However, for shared mobility to truly flourish and revolutionize transportation, it needs a supportive environment backed by legislative frameworks and infrastructure planning. So, let's take a closer look at how authorities can foster wider adoption of shared mobility.
1. Favorable regulations with an eye on the future
In the past, shared mobility solutions and business models have faced challenges in gaining acceptance from regulators. A prime example is the initial response of local authorities to Uber’s novel services at the time – ordering them to cease their operations immediately.
Shared mobility services can disrupt traditional transportation models – which may not be welcomed by everyone. However, the undeniable popularity of these services, exemplified by the rapid success of Uber, demonstrates the high customer demand.
Instead of battling against it, authorities might want to shift their focus to creating a supportive legislative framework, recognizing the significant benefits shared mobility can bring. It means regulations that prioritize safety, fair competition, consumer protection, and quality standards – creating an environment where shared mobility can thrive and provide reliable services to customers.
Shared mobility is constantly evolving, which means that regulations need to be flexible and adaptable to keep up with emerging technologies and new challenges. For example, as autonomous vehicles become a possibility, authorities will need to establish guidelines for their safe integration into existing transportation networks.
2. A collaborative approach
Collaboration between local authorities and businesses can be a decisive factor in creating a favorable environment for shared mobility. By working together, they can tackle common challenges, share data, and develop integrated transportation solutions.
Public-private partnerships can also involve incentives like tax breaks or subsidies to encourage the adoption of shared mobility. For example, offering tax breaks to companies that implement ride-sharing programs for their employees can encourage the use of shared transportation options instead of individual cars. Similarly, providing subsidies for shared mobility providers can help offset the initial costs of implementing and expanding their services.
Sharing data between shared mobility platforms and transport authorities is another way to benefit from this cooperation. The platforms have valuable information on accidents, trip patterns, and driver availability. Sharing this data with local authorities can help improve the transportation network, enhance travel apps, and identify underserved areas.
3. Building infrastructure to support the future of transportation
To meet evolving transportation needs, authorities should invest in infrastructure that supports innovative modes of transportation like electric vehicles and shared mobility services. By considering the needs of shared mobility users, infrastructure planners can make it a much more attractive transportation option.
Here are the key infrastructure needs for shared mobility:
Integration with existing infrastructure: To offer users smooth and effective transportation choices, shared mobility must seamlessly integrate with current transport systems like public transit. It should enable users to plan multi-modal journeys and switch between different modes of transport without hassle. For example, users should be able to seamlessly transition from a shared bike or scooter to a bus or train.
Charging stations: Keeping shared electric vehicles performing at their best relies on maintaining their charge. This requires establishing a network of strategically positioned charging stations throughout urban areas. If we're aiming for more people to use electric vehicles, we need to make charging them easy and accessible.
Dedicated parking: Shared mobility services need designated parking areas for their vehicles, such as bike racks and car-sharing parking spots. Well-organized parking infrastructure can reduce street clutter and make it easier for others to grab a shared mobility vehicle.
Information infrastructure support: Running shared mobility services smoothly, including handling bookings, payments, and logistics, depends greatly on a reliable information infrastructure foundation. With the advent of advanced networks like 6G, users will increasingly rely on this infrastructure to stay connected and make the most of these services.
The shared mobility landscape in France
Paris's recent ban on free-floating e-scooters has put France in the spotlight. To take a closer look at the shared mobility environment in France, we turned to Manon Lavergne, CEO of Viluso, a shared micromobility operator. We asked for her insights on the state of micromobility in the country.
Since the Mobility Orientation Law in 2019, the French government has been working to make shared transport easier to access everywhere. At COP 26 in 2021, France undertook to cut its CO2 emissions by 55%.
According to Manon, personal vehicle ownership in urban settings is losing favor among many French citizens, and Paris stands out as a shared micromobility epicenter. The city pioneered self-service shared mobility networks like Vélib' (2007), Autolib' (2011), and Cityscoot's shared electric scooters (2016).
However, in April 2023, Paris residents voted to ban free-floating e-scooters in the city. The reasons behind this decision included riders competing for space with pedestrians on sidewalks and complaints about e-scooters cluttering the pavements when parked.
Captur's case study on e-scooter parking habits in Paris revealed that the majority of users encountered no problems when parking scooters in designated bays. However, outside of the designated areas, users had to compete with other vehicles, resulting in poorer parking choices.
This example again emphasizes the need for proper infrastructure to support shared mobility. Lots of cities around the world were mainly designed with private cars in mind – which can create challenges for accommodating shared mobility solutions.
Anne Hidalgo, Paris' Mayor, campaigned with a strong green agenda and has introduced various changes to tackle pollution and traffic jams. Her vision includes a "15-minute city" where people can access work, shopping, healthcare, education, and leisure within a 15-minute walk or bike ride from their homes.
Yet, the chaotic state of free-floating e-scooters in Paris resulted in their ban. This scenario raises a question for other global cities: How can shared mobility be encouraged without disrupting other transportation choices and pedestrian movement?
According to Manon, the upcoming 2024 Olympic Games in Paris, which will draw many visitors, will provide valuable insight into the city's transportation system – including the viability of shared mobility.
Shared mobility is here to stay – so start planning today
By adopting a supportive approach, authorities worldwide can play a crucial role in enabling the full potential of shared mobility. While it may require a shift in mindset, the potential gains of reduced congestion, environmental sustainability, and improved transportation options make it a worthwhile consideration.
We know that shared mobility is here to stay and will only expand in the coming years. By taking a more proactive stance, authorities will be in a better position to integrate and maximize the full benefits of shared mobility.