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Everything you need to know when starting an Electric Scooter Rental business

Rideshare platforms are one of the quickest growing sectors in the public transit space. Between bikes, scooters, and mopeds, the growth of rentals as a means to access personal electric vehicles (PEVs) has helped grow the industry as a whole. The largest of these rideshare programs is electric scooters. Starting in 2017, companies like Bird, Lime, and Spin took the first initiatives to start citywide fleets in major metropolitan areas Like San Francisco and Washington D.C.. These programs flooded the streets with access to micro-mobility and introduced millions of people to the innovations that are making this exploding form of transportation so popular. After half a decade of operations, some large city fleets have faded. Not being big enough markets for these west coast behemoths, other small and medium size cities have still yet to see the trend yet. If you have considered bringing electric scooter rentals to your city you are probably wondering how to start. This article, by Levy Electric Scooters, focuses on the first steps someone can take when looking to start a rental scooter fleet.

The three questions to address when considering starting an electric scooter rental Fleet are the following:

  1. Where is the best place to start an electric scooter Fleet?

  2. What are the best hardware and software solutions for electric scooter rentals?

  3. What else is involved in running this sort of business?


Where is the best place to start an electric scooter Fleet?


The most common place to see scooter rentals are in large population cities. However, these fleets have gained more and more popularity in a variety of other places as well. College campuses, military bases, small and or tourist centric downtowns, beach towns, and apartment complexes are just a few that are common. An important factor to consider when choosing the right location for a rental fleet is the local laws. Every state has different regulations for these kinds of vehicles. In states where scooters are considered mopeds, they often need to be registered, their riders are required to be licensed, and safety features are strictly defined. In states where they are considered bicycles, restrictions center more on the age riders are required to wear a helmet and where they are allowed to ride or park. Lying somewhere in between are the myriad laws that govern the use of electric scooters that fall under their own classification.


Some states do not have clear definitions of e-scooters and almost all states leave the further definition of safety regulations up to local municipalities. The best way to know is to look into your city’s municipal ordinances. You can find some more information on how to do that here. In some circumstances, getting the city’s approval may just be the start. If you are looking to operate on a college campus, military base, or public park, you will also need permission directly from them.



What are the best hardware and software providers for electric scooter rentals?


What Types of Scooters are used for rental fleets?


The industry has evolved significantly over the past few years to build durable hardware made specifically for repeated rental use. While some of the larger companies have been developing their own rental vehicles like Bird's Bird Three and Lime's Gen 4 - most fleet operators that are not operating at that scale will choose to buy rental scooters from third party manufactures that specialize in vehicle production. Each of the models listed below supports internet connectivity and GPS which are essential for operating large scale rental fleets. For an in depth analysis of these options please see the Best Electric Scooters for Rental Fleets.



What software is used for electric scooter rental fleets?


Building a software platform from scratch is not a manageable task for most people who are looking to start a rental scooter business. Unless you are at the scale of someone like Bird / Lime, a better solution is often going to be finding a SaaS platform that will provide the front end and back end for a rental application and management dashboard.


White labeled solutions provide all of the backend tools and mobile apps (iOS & Android) required to quickly integrate with vehicles and get your rental fleet up and running with minimal engineering overhead. Most of these platforms handle everything from user registration, invoicing and payments, and backend dashboards to monitor and manage your fleet. As more companies have entered the market over the last 2 years providing specialized software for electric scooter fleets, we have an in depth analysis of popular platforms in the space here.


Levy Fleets main focus is rental fleets starting out with less than 50 scooters. Their program differs from competitors in that it offers tools far beyond just vehicles and software. Unlike most of the platforms listed above, partners with Levy do not need to seek their own liability insurance or pay for vehicle data plans separately. Partners can also rely on Levy’s live customer support and ongoing assistance with vehicles when it comes to sourcing parts and maintenance. They have a lower minimum fleet size, at only 4 and their pricing is comparable at 20% commission. Their fleet program is one price for one service that includes everything needed to run a rental business.



What else is involved in running this sort of business?


Charging


Keeping scooters charged is one of the largest parts of operating a rental fleet. Fleet managers are responsible for collecting uncharged scooters and changing/charging batteries when necessary. All electric scooters come with chargers. Operators will likely need a worker or multiple workers who can retrieve low battery scooters and plug them in to be charged. Most rental fleet software platforms will allow for features that take scooters offline if they are low on charge and direct admins to collect these vehicles. Some rental fleets have also offered incentives to users who leave their scooters charging when done or who bring low battery scooters to designated areas where the scooters can be more easily collected for charging.


When considering how to manage a fleet of charged, ready to use rentals, keep in mind that some scooters have features like the dual batteries or swappable battery packs which allow them to stay on the road longer without needing a charge. You may also want to consider options for docking stations to help reduce the number of times a worker will need to plug in a low battery scooter. See here for an overview of docking stations providers.


Customer service


Customer service is another aspect of operating rental fleets that is required every day scooters are operational. Most platforms will have short tutorials and FAQs to help customers get started. However, issues with payment processing, GPS, and mobile applications will affect ridership if they cannot be addressed. Having an extensive knowledge base to provide customers with self service tools is a great feature for customers willing to dig for an answer. Unfortunately, not everyone will be able to solve problems on their own. You should consider whether having a live chat is something you want available to customers of your rental fleet. Some companies, like Levy, will provide this for partners as part of their service, others will not.


Maintenance


Rental grade scooters are made durable to withstand daily usage. It is one of the reasons they are so expensive when compared to consumer grade scooters with similar specifications. The typical lifespan of a rental grade scooter is 18-24 months of regular usage. This can be increased with proper care. When scooters are mishandled, they can still be damaged. The most common repairs on scooters are for flat tires and aesthetic damage like plastic fenders and handlebar grips. These parts typically cost less than $50 and do not affect the operation of the scooter itself. With enough use, you can expect some scooters to need electrical components like motor controllers and LCD displays to be replaced as well. These parts can range from $50 - $150 or more depending on what needs to be fixed. Levy keeps spare parts for the scooters employed in our fleets available here, with discounted pricing available for our fleet partners.


Electric Scooter Fleet Insurance


One of the most expensive aspects of starting a scooter rental business is insurance. According to the Center for Disease Control, there is an overall scooter incident rate of 1.9 per 100,000 rides in the US. Most of these injuries are related to inexperienced riders, a lack of helmet use and/or riding under the influence. Most municipalities will require operators to have Commercial General Liability insurance in order to work within their borders. This does not cover damage or theft of the vehicles, but will cover the costs in the event a rider gets hurt or damages someone else’s property while using rental scooters. All cities will have different requirements and it is important to become aware of what the regulations are in your community. In general, most require $1 million - $2 million in coverage, but possibly up to $10 million depending on the location. These figures are the maximum amount paid out in any one claim. On average, scooter rental companies in America spend a minimum of $50,000 for $1 million in general liability coverage, even for a small fleet. Levy Fleets is the only rental partnership program which includes insurance coverage as part of their service.


Funding


Funding is a crucial part of any business. The cost of a rental scooter fleet is split between two components, the scooters and ongoing operational costs. If you are looking to start a rental fleet from scratch, there will also be an upfront cost for establishing an insurance policy and getting started with a mobile app or licensing agreement. Levy’s partnership program simplifies all this by including insurance, data, customer service, and our mobile app all into the same profit share agreement. That means that the only thing to purchase upfront is the scooters. A minimum order of 4 scooters will run just under $4500. Of course, partners are always welcome to start with more. Levy also offers financing through a 3rd party company called Klarna. They are integrated into our checkout system, so when you get to the final step of inputting your payment method you can select "Pay By Klarna" and it will route you to apply for monthly payment financing. If approved, the payment will be collected directly by Klarna financing, not Levy.


Payment / Fraud Risk Management


Payment and identity fraud is one of the largest risks fleet operators need to take into consideration. In most cases, there is only a few seconds between when a user completes signup via the app and when they unlock a scooter to rent. Letting fraudulent users register with invalid personal information or stolen credit cards means the entire asset could be at risk of theft.


There is a tradeoff between a frictionless sign up experience and additional fraud prevention processes that can slow down and hurt customer conversions. The additional operational resources needed to review IDs is usually too impractical to consider, especially with a distributed fleet. Platforms like Levy Fleets help automate this by using 3rd party datasets to validate a user’s provided information and payment method in real time before a vehicle can be unlocked.


Billing and Collections


In the case customers of your business rent and abandon the vehicle without paying, having a process and system in place to recoup these funds is imperative to running a profitable fleet. This could be the case when a customer uses a low credit limit card, or if they end up losing / damaging a scooter and cancel their card to avoid being held responsible for additional fees.


Collecting unpaid fees is a difficult situation that involves a strict legal process that must be followed, including sending physical letters and making the appropriate effort to contact the customer by phone before an account is sent to collections. Once an account is in collections, be prepared to have all the necessary trip and registration evidence to provide to credit bureaus in the case the charge is disputed.


Marketing (Google Local Search / App Store SEO)


While physical outdoor products like electric scooters have a certain degree of built-in advertising, an optimized online marketing funnel will be key to attracting new customers as well as retaining existing users. App store rankings, Google Search, Display marketing, and Email targeting are all fundamental aspects of making your fleet stand out in a competitive market. Digital discovery is the first step of getting users familiar with your service before converting them as customers for their first rental.



In conclusion


There is a lot that goes into starting a rental fleet. Once you have decided what you need for scooters and software, all the other factors - insurance, customer service, permitting, and financing just to name a few, come into focus. The most important thing to consider is who you will be working with. There are a lot of providers of scooters, software, and insurance, but there is only one that manages all three on your behalf. Levy's fleet partnership program is geared towards entrepreneurs who are looking to do more than just piece together a service that will work. Levy maintains a high level of cooperation with partners to build programs that work seamlessly from day 1 and that scale reliably to meet the full needs of your market. Please feel free to reach out to partners@levyelectric.com with any questions about rental scooter fleets or interests in how to get started.

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