Optimal service life analysis of shared bicycles under ‘three-year mandatory scrapping’ policy

Abstract

‘three-year mandatory scrapping’ policy for shared bicycles has been introduced in some Chinese cities recent years. With this policy, bicycle-sharing operators must deal with the contradiction on high investment and long payback period. From the perspective of bicycle-sharing operators, an optimisation model is first proposed to determine the optimal service life of shared bicycles by maximising the net present value and make a comparison with three-year scrapping period. Second, in view of environmental benefits brought by bicycle-sharing, the service life to offset carbon emissions is investigated to verify the policy's reasonability. Third, Mobike, OFO and Hellobike are taken as examples to discuss what parameters affect optimal service life and further provide some management insights for the development of bicycle-sharing. The results show: when the diffusion degree of quality level on demand is low, the policy is unconducive to operators with high-quality bicycles; raising rental price is an ineffective way to increase the profit of operators; the service life to offset carbon emissions is usually within three-year scrapping period, but it depends partly on the replacement ratio for different transportations. The higher the replacement ratio, the more the environmental benefits brought by bicycle-sharing.