With the rapid development of sharing economy, investing in electric scooters and operating e-scooter sharing platforms have become a new opportunity for many investors. However, the high costs of building and operating the platforms as well as the uncertain policy environment have made some investors hesitate. This article analyzes the costs and benefits of investing in electric scooters, aiming to provide references for potential investors.
The operating costs are high while the profits are unstable in the initial period
According to industry insiders, to build an e-scooter sharing platform from scratch requires at least 2 to 3 million RMB in development costs. The franchise fees to join existing platforms also range from hundreds of thousands to millions depending on the scale and models. Meanwhile, the unstable user base, immature operations, as well as policy uncertainties in the initial period of launching the business lead to fluctuating revenues. Therefore, investors need to prepare sufficient capital reserves to sustain continuous loss in the first 1-2 years.
Joining existing platforms can reduce costs but limit flexibility
For small and medium investors with limited capital, joining existing sharing platforms through franchise model can significantly reduce upfront costs. However, they have to follow the standardized business models and operations set by the platforms, with little flexibility to make changes. If investors want to build differentiated brand images and services, working with third-party platforms may not be the best option.
Exclusive operating rights in a region provide opportunities despite high risks
Some e-scooter sharing platforms offer franchise models that allow partners to obtain exclusive operating rights within a target region. This can help investors occupy local markets quickly and cultivate brand influence. But the high costs of up to millions RMB pose a huge risk, especially when the markets are not mature enough. Overall, regional exclusive rights suit investors with strong capital power yet low risk tolerance.
Policy risks remain the biggest uncertainty to profitability
The tightening regulations on e-scooter sharing businesses in Chinese cities like Beijing and Shanghai in recent years have adversely impacted many operators. Although policies differ across cities, investors should be prepared for potential policy changes that limit fleet sizes, raise operating standards, or ban e-scooter sharing entirely. Moreover, cooperation with government is crucial to mitigate policy risks and boost brand image. But it requires investors to have strong industry resources and connections.
In conclusion, while investing in electric scooters and operating e-scooter sharing platforms is full of uncertainties at current stage, it remains a business with huge growth potentials in the long run. Investors should choose appropriate entry models based on their capital strength, risk preference, and resources. Meanwhile, flexibility in operations, sustainable capital reserves, close cooperation with government, and differentiated services are key factors that can help build profitable and sustainable e-scooter sharing business.