What happened: Following in the footsteps of Mobike and Bluegogo, Ant Financial-owned Hellobike recently doubled the rates for bike rentals in Beijing from RMB 2 to RMB 4 an hour, priced in 15-minute intervals. In at least one other city, Hangzhou, users noticed that its rates rose to RMB 3 per hour from the same original price. In late March, Bluegogo more than doubled its effective price per hour in Beijing to RMB 2.5 from RMB 1, while in early April Meituan-Dianping’s Mobike hourly rates increased to RMB 2.5 from from RMB 2.
Why it’s important: As a CCTV report pointed out on Monday, Hellobike’s new prices now make it more expensive than taking the bus in Beijing, which costs RMB 1 for a 3-kilometer route. This may be a blow to the “shared bike” business model, which originally relied on cash incentives and cheap rides to popularize the service. Far from sustainable, that model spelled disaster for startups such as Bluegogo, which had to be bailed out by ride-hailing giant Didi. Hellobike has avoided some of those major pitfalls in part because it strategically targets second-tier cities and draws from Ant Financial’s substantial base of users. However, impact may be limited because, as a Hellobike staff member told CCTV, a large majority of bike-rental users take short trips and won’t be affected by the incremental price increases. While that softens the impact of the price hike on users, it also raises the question of how much extra revenue the move will bring the company.