Profitability is the goal for mobility and micromobility companies, however it can be difficult to achieve. As we outlined in our first article in this series, high initial investments can present certain challenges on the path to a profitable shared mobility business.
But knowing exactly what you’re up against can help in overcoming the roadblocks. We collected the expert opinions and advice from some of our past Wunder Mobility Podcast guests, including Sandra Phillips, Timo Buetefisch and Valerian Seither. Here they pinpoint the common hurdles to profitability and offer advice on how to solve them.
The top 4 barriers to a profitable shared mobility business
1. Hardware
High initial investments into the right hardware can be a huge setback for companies. It might be tempting to try and save a few bucks by getting the cheapest models available, but sharing-ready vehicles are the most crucial aspect of a mobility company and you should invest in the right ones for your business.
Valerian Seither, CEO of emmy, gave his tips on what factors to consider when shopping for vehicles. According to Valerian, it comes down to the total cost of ownership, which includes the following factors:
- the price of the vehicle
- the availability and long term reliability of the vehicle
- the range of the vehicle, which has a massive impact on operational costs
For mobility companies, there’s obviously no way around purchasing vehicles. In order to ensure profitability down the road, make sure to invest wisely in the right vehicle models for your business.
2. City fees
As Sandra Phillips, founder and CEO of movmi, notes, city fees can be very expensive. Especially for car operators, parking fees present a high recurring cost that can cause financial woes over time. In most cases, administrative fees can’t be avoided, however it’s crucial to factor them into your financial planning. For free-floating micromobility operators, parking and related expenses present less of a problem (different from station-based models), however they have other issues to contend with.
3. Insurance
For micromobility, Sandra continues, the big ticket item is insurance. Since micromobility is a relatively new market, it’s still difficult to figure out the correct insurance amount for the vehicles – kickscooters, e-bikes and e-mopeds – and what insurance fees are fair for riders. Luckily there are new solutions on the market, like Connected Insurance, which offer on-demand and usage-based insurance pricing within mobility apps. Not only does it protect riders and give them a peace of mind, it’s also a great way to add an additional revenue stream to your mobility service.
4. Steep competition
It’s an exciting time for transportation. New mobility is ubiquitous, especially in cities. This is great news for the consumer, however it can mean that there is a lot of steep competition in the city you’re operating in. As Timo Buetefisch, Co-founder and CEO of Cooltra, warns, it’s nearly impossible to become profitable in a city where there are more than three direct competitors. Take this into consideration when planning your expansion. “The most important thing is to stay profitable,” Timo says, which means that someone you will have to compromise on growth if it means you can retain or attain profitability.
Want more insights on how to get on the road to profitability? Read the expert advice in our first article, Can New Mobility Become Profitable?.