Melbourne will need more eScooters
A cautious approach to fleet size is unlikely to create the “network effect” needed to optimise usage in Melbourne’s eScooter trials.
By Stephen Coulter & Krystyna Weston, Founders Zipidi Micromobility & Convenors of the Asia Pacific Micromobility Alliance
1,500 Lime and Neuron electric scooters will launch in Melbourne tomorrow. We think this will be too few to prove the benefits of electric scooters.
We think Melbourne has the characteristics to be one of the most successful eScooter cities in the world as we wrote recently:
1,500 scooters is unlikely to provide adequate “liquidity”
Liquidity is a financial term borrowed by the rental scooter industry — you need enough scooters for them to be visibly available in the rental area. Riders are unlikely to walk further than 200 metres to find a scooter for an average ride of around 10 minutes. If friends want to ride together, finding two or more available scooters can be even harder if there aren't enough scooters on the ground.
This results in the scooter companies not being able to generate enough rides for a breakeven income. It's particularly challenging if the city is charging operators fees and yet there aren't enough scooters to create the required “network effect”. Some cities charge operators $1/day or more for deploying scooters. Other cities do not charge fees as they see private operators providing much needed first/last mile transport infrastructure, which saves the city or state infrastructure spending.
To put Melbourne in perspective, the operating area is around 100 square kilometres. If equally distributed an electric scooter would be every 258 meters. If they are deployed in pairs the gap doubles to 516 meters. It’s too far apart to get regular active users.
The outcome; Lime and Neuron will place larger “nests” of scooters in core areas and hope to serve them well but will not provide accessible services throughout the test region, without much bigger fleets.
As a comparison, Oslo in Norway has a similar size operating area. Yet with a smaller population, it allows more than 6,000 scooters to operate, providing better liquidity. On average a scooter every 129 metres.
Even comparing Melbourne to Adelaide highlights the small Melbourne fleet size — the main scooter area of Adelaide is around 34 square kilometres and has 2,000 scooters — an area one third the size of Melbourne’s trials with 33% more scooters.
The small fleet sizes will result in some early benefits for riders lucky enough to find available scooters nearby. We expect thousands of free ride incentives to be offered by Neuron and Lime in efforts to build rider liquidity. Lime is also likely to leverage its existing database of Melbourne bikeshare customers and Melbourne residents who have used Lime around the world. Even if this is successful, we expect the small fleet size to limit overall rides.
A Better Model
To encourage usage and optimising the fleet size for a city, we think a better model would be:
- Zero permit fees for the first three months — don’t have a barrier to usage optimisation
- No fleet cap — let operators have larger fleets to meet the areas they are serving. Experience around the world guides optimal fleet size, rather than minimal fleet sizes undermining the success of programs.
- Review the results after three months and determine the optimal size and triggers for further increases or decreases in the number of scooters.
No one wins in a failed program — the city does not get the mode shift away from cars and the increased local economic activity. The operators lose money and can’t sustain viable operations.
We understand Melbourne has some demand-driven triggers to increase fleet sizes — but if there aren't enough scooters for a network effect, the triggers will never be pulled!
