How to Start an Electric Scooter Rental Business: A Comprehensive Guide

Electric scooters are becoming a popular and eco-friendly alternative to cars and public transportation in many urban areas. They offer convenience, affordability, and fun for riders of all ages and backgrounds. 

If you are interested in tapping into this growing market, you might want to start your own e-scooter rental business. But do you know how to start an electric scooter rental business? What are the steps involved, and what are the challenges you might face?

In this blog post, we will guide you through the essential aspects of starting an electric scooter rental business, from researching the market to choosing the right scooters to marketing your services.

By following our comprehensive advice, you will be able to create a profitable and sustainable scooter rental business that meets the needs and expectations of your customers. 

You will also contribute to a greener and more livable urban environment by reducing traffic congestion and carbon emissions. So, let’s get started!

Best places to start an electric scooter fleet

Electric scooter rentals are most popular in big cities, but they are also becoming more common in other places. Some examples are college campuses, military bases, small or touristy downtowns, beach towns, and apartment complexes. 

When you want to start a rental fleet, you have to think about the local laws. Different states have different rules for these vehicles. In some states, e-scooters are like mopeds, and they need registration, licenses, and specific safety features. 

In other states, electric scooters are like bicycles, and the rules are mainly about the age for wearing helmets and where to ride or park. There are also many laws for electric scooters that have their own category.

Some states are not very clear about what e-scooters are and they let the local cities decide the safety rules. The best way to find out is to check your city’s laws. You can learn more about how to do that here.

Sometimes, you might need more than just the city’s approval. If you want to run your fleet on a college campus, military base, or public park, you will need their permission too.

How Much Does it Cost to Start a Scooter Rental Business?

If you want to rent out scooters in a tourist spot, you will need to spend around $9,600 on the basics. This includes renting a place to store and display your scooters, and buying five of them. 

If you want to run an e-scooter sharing business, you will need a lot more money – at least $100,000. The biggest expense is creating the app that your customers will use.

To start your electric scooter rental business, you will need these things:

  • Scooters 
  • Helmets 
  • Battery chargers 
Initial CostsRough EstimateAverage
Creating a business name and legal entity$160 – $210 $185
Getting the required licenses and permits$110 – $320 $215
Buying insurance for your business $120 – $310 $215
Printing business cards and brochures $220 – $320 $270
Setting up a website for your business$1,100 – $3,200 $2,150
Developing an app for your e-scooter rental business $0 – $75,000 $37,500
5 to 20 scooters to rent out $6,000 – $22,000 $14,000
Buying Renting a location for your tourist scooter rental business$0 – $3,200 $1,600
Total$7,710 – $104,560$56,135

Best hardware and software providers for electric scooter rentals

What types of scooters are used for rental fleets?

To meet the demand for repeated rental use, the industry has made significant progress in building sturdy hardware in the past few years. Some of the bigger companies have their own rental vehicles, such as Bird’s Bird Three and Lime’s Gen 4

However, most fleet operators who are not at that level will opt for rental scooters from third party manufacturers who focus on vehicle production. 

All of the models mentioned below have internet connectivity and GPS, which are crucial for managing large scale rental fleets. For a detailed comparison of these options, please refer to the Best Electric Scooters for Rental Fleets.

What software is used for electric scooter rental fleets?

Creating your own software platform from scratch is too difficult for most people who want to start a rental scooter business. Unless you are as big as Bird or Lime, you might want to look for a SaaS platform that can offer you the front end and back end for a rental app and a management dashboard.

White labeled solutions give you all the backend tools and mobile apps (iOS & Android) you need to easily connect with vehicles and launch your rental fleet with little engineering work. Most of these platforms take care of everything from user registration, invoicing and payments, and backend dashboards to track and manage your fleet.

You can take a look at analysis of popular platforms in this area here, as more companies have joined the market in the last 2 years offering specialized software for electric scooter fleets.

What else is involved in running this sort of business?

Charging

One of the biggest challenges of running a rental fleet is ensuring that electric scooters have enough power. Fleet managers have to pick up scooters that run out of battery and replace or recharge them as needed. All electric scooters have chargers included. 

Operators may require one or more workers who can collect scooters with low battery and connect them to a power source. Most rental fleet software platforms have features that disable scooters with low battery and notify admins to retrieve them. 

Some rental fleets have also given rewards to users who plug in their scooters after using them or who take low battery scooters to specific locations where they can be easily picked up for recharging.

To keep a fleet of rentals ready to use and fully charged, remember that some scooters have features like dual batteries or removable battery packs that let them last longer on the road without needing a recharge. 

You may also want to look into docking stations that can help you cut down on the frequency of plugging in scooters with low battery. 

Maintenance 

Rental grade electric scooters are built to last through daily use. This is why they are more expensive than consumer grade scooters with the same features. A rental grade e-scooter can usually last for 18-24 months of regular use. This can be extended with good maintenance.

When scooters are abused, they can get damaged. The most frequent repairs on scooters are for punctured tires and cosmetic damage like plastic fenders and handlebar grips. These parts usually cost less than $50 and do not interfere with the scooter’s performance. 

With a lot of use, you may need to replace some electrical parts like motor controllers and LCD displays. These parts can cost from $60 – $170 or more depending on what is broken.

Customer Support

Providing customer service is another essential part of running rental fleets that is needed every day for e-scooters in use. Most platforms will offer brief guides and FAQs to assist customers with getting started.

However, problems with payment processing, GPS, and mobile applications will reduce ridership if they are not resolved. Having a comprehensive knowledge base to give customers self service tools is a great feature for customers who are willing to look for an answer.

Sadly, not everyone will be able to fix issues on their own. You should think about whether having a live chat is something you want for your rental fleet customers. Some companies will offer this for partners as part of their service, others will not.

Electric Scooter Fleet Insurance

Insurance is a big cost factor for starting an electric scooter rental business. The Center for Disease Control reports that the US has a scooter accident rate of 1.9 per 100,000 rides. Many of these accidents are caused by riders who are not skilled, do not wear helmets or are drunk. 

Operators need to have Commercial General Liability insurance to operate in most cities. This insurance does not pay for the e-scooters if they are stolen or damaged, but it pays for the medical bills or property damage if a rider hurts themselves or someone else while renting a scooter. 

Different cities have different rules and you need to know what they are in your area. Usually, you need to have $1 million – $2 million in insurance, but sometimes up to $10 million depending on where you are. These numbers are the most that the insurance will pay for one claim. 

Electric Scooter rental businesses in America usually pay at least $50,000 for $1 million in general liability insurance, even if they have a small number of scooters.

Payment/Fraud Prevention

Fleet operators face a big challenge of payment and identity fraud. Users can sign up and rent a scooter in a few seconds. But some users may use fake or stolen information and cards, which can lead to scooter theft.

To prevent fraud, operators can add more steps to verify users’ identity and payment. But this can make the sign up process longer and less user-friendly, and reduce customer conversion. 

Checking IDs manually is also hard and costly, especially for a large and spread-out fleet. Some fleets solve this problem by using 3rd party data to check users’ information and payment in real time before they can unlock a scooter.

Invoicing and Payments

When your customers rent a vehicle and leave it without paying, you need a process and system to get back your money. This is essential for your fleet’s profitability. 

This may happen when a customer has a low credit limit card, or when they lose or damage a scooter and cancel their card to avoid extra fees.

It is hard to collect unpaid fees. You have to follow a strict legal process. This includes sending letters and calling the customer by phone before you send their account to collections. 

When their account is in collections, you need to have all the trip and registration proof to show to credit bureaus if the customer disputes the charge.

Promotion (Google Local Listing/App Store Optimization)

You can advertise your electric scooters by their physical presence, but you also need an online marketing funnel that works well. This will help you get new customers and keep the ones you have. 

You need to use App store rankings, Google Search, Display marketing, and Email targeting to make your fleet more visible and attractive than others. The first thing you need to do is to make users aware of your service online and then persuade them to try it for their first rental.

How Much Can You Earn From a E-Scooter Rental Business?

The average rate for renting a scooter is $15 per hour. You can expect to keep about 60% of that as your profit, after paying for maintenance and other expenses. This is based on running a conventional scooter rental business.

In the first year or two, you can make a good income by renting out five scooters for four hours each day, 280 days a year. That would give you $84,000 in yearly revenue. 

Your profit would be over $50,000, with a 60% margin. As your business grows, you can buy five more scooters and rent them out for five hours a day. That would increase your yearly revenue to $210,000, and your profit to a whopping $126,000.

Pros and Cons of Electric Scooter Rental Business

Pros

  • Substantial Earnings – Earn around $15 per hour for each scooter
  • Flexibility – Work from home by launching a scooter sharing business
  • Booming Market – The demand for scooter rentals is increasing rapidly

Cons

  • Expensive Maintenance – Spend a lot on repairing and maintaining scooters
  • High Competition – Face tough competition from big names like Lime

Conclusion

Starting an electric scooter rental business can be a profitable and rewarding venture. You can tap into the growing demand for eco-friendly and convenient transportation options, especially in urban areas. 

However, you will need to plan carefully and invest wisely to succeed in this competitive market. You will need to choose the right type of scooter, the right location, the right app, and the right marketing strategy. 

You will also need to comply with the legal and safety regulations in your area. By following the steps and tips in this blog post, you can launch your electric scooter rental business and enjoy the benefits of being your own boss.

If you have any questions or feedback, please feel free to leave a comment below. Don’t forget to share this blog post with your friends. Happy riding!

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