Stockholm Thinks It Can Have an Electric Bikeshare Program So Cheap It’s Practically Free

This past June, Stockholm introduced a new shared bicycle service to replace Stockholm City Bikes, which operated from 2006 until 2018. Since that service shut down, the city was one of many around the world swamped by shared e-scooters that littered sidewalks and streets. As a result, the city wanted to reboot a bikeshare program with a more modern approach without succumbing to the trappings of the dockless scooter and bike craze.

“I would say the general public is quite tired of the e-scooters lying around,” said Daniel Mohlin, Nordics Regional Manager for Inurba Mobility, the company that won the seven-year contract for the new bikeshare program. “The most common comment has been, finally, there’s something to replace the e-scooters.”

The new service, Stockholm eBikes, started relatively small, with just over a thousand bikes this past summer, but will grow to more than 5,000 for this coming summer. However, this is not just another bikeshare program. First, all of the bikes are electric. And second, it is ridiculously, ludicrously, almost impossibly cheap to use.

“It’s a truly unique system,” Mohlin said, “Both in terms of the technology and the setup and the pricing in combination with it.”

The first time I stumbled on the Stockholm eBikes website and did a currency conversion, I figured there must be some mistake. The website says a 24-hour plan “just to unlock a bike and enjoy Stockholm eBikes for 24 hours” costs 11 Krona, or 98 cents at current conversion rates. A 7-day plan is 26 Krona ($2.32). A 30-day plan is 35 Krona ($3.12). And a whole year of unlimited 90-minute e-bike rides costs a measly 157 Krona, or just about $14. If you want to ride more than 90 minutes in one trip, you will be charged an extra 11 Krona (about $1) per extra hour.

This is not simply cheap by e-bike rental standards. It is several orders of magnitude cheaper. And it is a story with global implications for the bikeshare industry and urban transportation in general. Because bikeshare systems have entered a paradox. The invention and proliferation of e-bikes have the potential to make bikeshare systems even more useful thanks to the effortless pedaling including on hills and higher speeds. But virtually every system has surcharges to ride an e-bike, making it expensive to use over time.

To put this in perspective, here in New York, a monthly membership to the city’s bikeshare system, Citibike, which is owned by Lyft, costs $15.42 per month, or a day pass costs $15. That gets you free e-bike unlocks, but you still have to pay 15 cents per minute to ride an e-bike. That means the cost of just 93 minutes of e-bike riding in New York—not even including the monthly membership fee or one-day pass—is the same as an entire year of unlimited 90-minute rides on Stockholm’s system. 

The story is the same elsewhere. Lyft owns most of the U.S.’s largest bikeshare systems through its acquisition of Motivate in 2018. San Francisco’s bikeshare system, by far the most expensive, charges $29 a month for membership and 20 cents per minute to ride an e-bike. Chicago’s bikeshare system charges 16 cents per minute for members who must pay $10 per month. Washington D.C.’s Capital Bikeshare, one of the few large bikeshare systems not owned by Lyft, charges $8 a month for a membership and 10 cents a minute for e-bike rides. 

It is not just U.S. cities that are way more expensive than Stockholm. London’s Santander e-bikes are only available to members, who pay 20 Pounds (about $22.50 at current exchange rates) per month plus one Pound for each e-bike ride up to 60 minutes. Barcelona’s Bicing system costs 50 Euros a year (about $50) plus 35 cents for a 30-minute ride or 90 cents for a ride of two hours or less. Paris’s Velib bikeshare is one of the more affordable in Europe, where 8.30 Euros a month gets you two free 45-minute e-bike trips (each subsequent trip is a Euro per trip). 

So I asked Mohlin the obvious question: How can Stockholm offer essentially the same product and service for so much less than basically every other city?

The obvious assumption would be that, unlike most every bikeshare system in the world which is expected to break even without public subsidies in contrast to traditional public transportation like buses and subways, the government is helping to foot the bill of Stockholm eBikes. Indeed, this would hardly be a crazy thing for Stockholm or any other city to do. It could ensure the city’s bikeshare system is affordable and accessible to all, since electric bikeshare systems can provide all kinds of benefits in reduced traffic, climate-friendly transportation, quicker trips, and health improvements for the people who use it versus more traditional ways of getting around. 

But Mohlin said that isn’t the case in Stockholm. The city isn’t giving Inurba any money. 

There is a long and trying history of cities—in the U.S. in particular—expecting their public transit systems to pay for itself like a business only to realize that is not possible. Nearly all transit systems in the world are funded through general tax revenues or direct subsidies in addition to fares. For almost its entire existence, the bikeshare industry has been caught between the two concepts. On the one hand, paying for itself makes it easier for cities to say yes to a new thing. On the other hand, bikeshare has proven incredibly difficult to make money on. Stockholm’s experiment in super-cheap e-bikeshare is perhaps one of the final moves to try and create a truly profitable, sustainable bikeshare system that doesn’t involve taxpayer dollars. (Not that doing so would be an inherently bad thing.)

Nor is the city bending over backwards to let Inurba do whatever it needs to do to run a cheap, profitable system. The seven-year contract includes a number of KPIs (Key Performance Indicators) with financial penalties if Inurba misses the targets. For example, at least 90 percent of the bikes have to be available for rental at all times. If not, Inurba is penalized 10 Euros per bike per day (Mohlin cited the fines in Euros because Inurba’s headquarters is in Barcelona). There are also requirements over how quickly they must swap batteries on the bikes (five hours after the charge gets low) and how quickly damaged bikes must be removed. Stations can only be empty for up to one hour, and the company can be fined up to 1,000 Euros per month if it misses this target consistently. They also must have a minimum of 300 stations in all of Stockholm’s neighborhoods, not just the denser city center.

Mohlin says they plan to run a profitable bikeshare system by doing one thing most other systems do and another thing he says is too often missing. The first thing, the one that everyone does, is advertising. Inurba will be selling advertisements on the bikes and on 350 advertising locations near where the bikes are parked. But the brand will remain Stockholm eBikes. Citibike paid $41 million to be the brand name for the first five years of the bikeshare program in New York and renewed the deal in 2018 for a reported $70.5 million over 10 years. The population of New York is much larger than Stockholm’s and therefore more lucrative for advertising purposes.

Advertising will only get them so far. The entire bikeshare system, Mohlin said, has been designed to be as efficient and cost-effective as possible. And this, he says, is the biggest difference between Stockholm’s system and the ones other cities offer.

“It’s the fundamental design of the system,” Mohlin explained. “A bikeshare scheme can be extremely expensive if you design it the wrong way. If you have imbalance [in where the bikes are], if you have to move bikes all the time, if you don’t have capacity at the stations, it can cost enormous amounts. In order to keep it efficient, it’s all about the design of the system. It’s about matching types of bikes, the IT technology, the support systems, and station design. This is a puzzle that needs matching and then you can find efficiencies in the system.” 

By way of example, Mohlin explained how Stockholm’s docks work. Obviously, letting people park their bikes anywhere they want was a non-starter given every city’s experience with the dockless systems. But the whole appeal of the dockless system for the startups that popularized them was that physical docks cost a lot of money to install and maintain.

So Inurba adopted a hybrid solution that some e-scooter companies have piloted in a few cities. Instead of traditional docks, there are virtual stations, painted lines on the ground with a sign post. Users lock and unlock the bikes via an app. Locking the bikes requires being within one of the station’s geofenced zones. These virtual stations not only save Inurba lots of money not having to outfit and maintain physical docks, but it also provides operational flexibility. Because there is some wiggle room in the geofence by nature of GPS’s imprecision, the stations can “swallow a lot more bikes” than traditional docks, as Mohlin put it. This helps avoid the always-empty-or-always-full phenomenon many docked bikeshare systems struggle with.

Mohlin also talked up Inurba’s IT infrastructure that helps them learn which stations tend to get full at what time of day and which tend to get empty. He says this enables them to be more efficient with bike-balancing efforts, that it’s “basically, do the right task in the right order at the right time.” 

Another smaller money-saver is the company uses cargo e-bikes to go around swapping out batteries, which has to happen about once every three days per bike on average. This means battery swappers aren’t stuck in traffic driving a van and can swap out more batteries per worker. 

This isn’t to say everything has been a bikesharing utopia since the system’s launch. By his own admission, Mohlin said they had technical problems during the summer which they hope are behind them. Supply chain issues kept them limited to about 1,000 bikes instead of the planned 5,000. And, like most every bikeshare system anywhere, they struggled with vandalism. There’s “a lot of water in Stockholm which is not good for bikes,” he said, referring to the classic activity of tossing dockless bikes into rivers. They also found many bikes harvested for parts with nothing left other than a frame, but that has slowed in recent months. “It feels like the market is saturated for our parts now,” Mohlin said.

Still, the response from that first summer, problematic as it was, reinforced to Mohlin and his colleagues their model works. 55,000 active users took almost 450,000 trips, averaging six per day per bike, which is generally considered high for a bikeshare system. Plus, the average trip was almost 40 minutes, much higher than most bikeshare schemes with mechanical bikes, including Helsinki where Inurba also operates the bikeshare system where the average trip is between 12 and 16 minutes. 

Per the contract with the city, Inurba can only raise the price of the system along with inflation, so this isn’t some introductory pricing scheme. Instead, they are trying the theory that a well-run transportation system can be cheap, useful, and accessible to all. It’s a bold move that, if effective, would be one of the most dramatic improvements to bikeshare in the industry’s history.

 “We’re really looking forward for next year when we can get the full system in operation,” Mohlin said. “But I’m confident this is a really unique system that is going to have an impact.”

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