Gadgetory

- Electric scooters! Love them or hate them, they're everywhere now. Shareable electric scooters can be found in most American cities. And they're quickly expanding around the world to cities like Paris, Vienna, Madrid, and Tel Aviv. Scooter-sharing has been one of the biggest tech crazes of the last year with venture capitalists pouring more than $1 billion into the startups, but there's a dark side to scooter-sharing. You see, the fundamental numbers don't really add up because the scooters don't bring in enough money to cover their cost. Ride-sharing is wildly unsustainable, and if the business continues on this current path, it's entirely possible that these scooters will end up in a mass graveyard, like those viral photos from China. But to understand the nuts and bolts of scooter-sharing, we really need to look at the big picture. (techno music) - Electric scooters like this one have flooded the streets of Santa Monica in recent months. - The scooter phenomenon got its start in September 2017, when a company called Bird began dumping electric scooters on the streets and sidewalks of Santa Monica, California. A bike-share company, Lime, followed suit, dropping its scooters in San Francisco, and the race was off. People complained about blocked sidewalks and scofflaw riders, but the scooters were cheap to use — typically costing a dollar to unlock and then 15 cents for every minute of riding. And wouldn't you know it, they turned out to be really popular — racking up millions of rides and earning Bird, Lime, and their competitors tens of millions of dollars in revenue. The startups used the rising popularity to rake in an additional hundreds of millions of dollars in investment cash. And that's when scooters really started to appear everywhere you look. But despite all that cash, it's really hard to turn a profit when you look at the unit economics. That's how much revenue each individual scooter brings in for the company. And the most important number to consider is the life span of each scooter. The more trips and miles a single scooter can cover, the better it is for the scooter company, which have to recoup the cost of each vehicle before they can start making money. In October 2018, it was reported that Bird was spending $551 to purchase each scooter with the goal of reducing that cost to $360. That meant Bird needed five rides a day for a little over five months to recoup the initial cost of the scooter. But the early data suggests that these scooters aren't lasting five months. They're not even lasting for two months. In fact, the scooter companies would be lucky if these things last longer than 30 days. Now, Quartz crunched the numbers from Louisville, Kentucky, and found the average lifespan of a scooter was only 28.8 days, doing an average of three and a half rides per day. At these rates, Bird only recouped $67 on the cost of the average scooter. In other words, it loses a whopping $293 per scooter. That's not even factoring in a host of other costs, like taxes and fees. Now, Bird disputes this analysis, claiming that scooters get moved around, sometimes to different cities, and that just because a scooter lasted in Louisville for 28 days doesn't mean that that's its entire lifespan. And it's certainly true that the average lifespan can vary depending on the terrain, the city, and the amount of use. But it's also true that these things take a lot of damage. They get knocked over, thrown into rivers and lakes, they get tossed up into trees, they even get set on fire! The vandalization of scooters has become a viral trend. Last October, scooter haters dumped 60 electric scooters in a lake in Oakland, California. Now, part of the reason they're breaking so fast is that these scooters were never meant to be used this way. The electric scooters that Bird deployed, at least initially, were rebranded Xiaomi devices intended for use by a single owner with a weight limit of 200 pounds, in mild weather, on flat surfaces. So when the rider's a little heavier, or the ground is a little wetter, things start to break. Even the guy making tons of money off of scooters has his doubts. A top executive at Segway-Ninebot, which sells its scooters to the ride-sharing companies, questioned in a recent interview whether scooter-sharing was a sustainable business. So how can scooter-sharing startups turn these grim numbers around? Well, thanks to the millions of dollars pumped into electric scooter companies by venture capitalists, they may not have to. At least, not right away. Investors are betting that these companies will be worth billions of dollars once they figure out how to turn a profit. And as long as they think that, they'll be willing to pour more money into making it work. The scooter companies say they want to become profitable, or at least stop losing so much money. The CEO of Bird told me that in order for his company to eventually break even, the scooters will need to increase their lifespan to six months. That's a lot longer than 28 days. Their plan is to build a better scooter, one that's more durable and longer-lasting. And they're starting to do that. Bird rolled out its new, more rugged, Bird Zero scooter recently, which is manufactured in collaboration with a Chinese company called Okai. Lime did the same with its new Gen 3 scooter, and there are other ideas in the works, such as built-in locking mechanisms and field-swappable batteries that can help reduce the daily wear and tear on these scooters. Will these new, more rugged scooters last longer? Probably, but they'll unquestionably be more expensive to manufacture, which means they'll need to stay in operation even longer before the companies can begin to recoup their costs. It's a Catch-22, and it's not entirely clear that the scooter startups have a solution. And in the end, it may not just be the scooters, but the companies themselves that end up having shortened lifespans. Thanks for watching and if you're riding a scooter, please be safe and wear a helmet. Like and subscribe, and please watch more on YouTube.com/TheVerge.