Can Car Sharing Survive?

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Last week brought more bad news to the North American mobility market. Following announcements by REACH NOW and Lime, the car sharing vertical jointed SHARE NOW owned by BMW and Daimler will shut down free floating car sharing in 5 cities. That leaves just Seattle, New York, Vancouver, Washington DC and Montreal with free floating service from the former Car2Go.

While there are other free floating car sharing companies such as GIG in Berkley and Oakland and Free2Move in Washington DC, SHARE NOW’s shutdown means only station based car sharing providers ZipCar and Maven as the only other companies with a national footprint.

Our cities need transportation options. Of course public mass transit is critical, but it cannot be the only solution. Too many of North American cities lack the infrastructure or are so geographically expansive that transit can’t work for everyone. Ride sharing is popular but contributes to making traffic worse, not better. Micromobility is an exciting new option that reduces car trips. It unfortunately creates safety concerns as unprepared riders navigate crowded streets and sidewalks. It’s also not a solution that works well in cold and rainy weather.

Car sharing was supposed to be part of our new mobility future, helping to reduce the need for private car ownership and increase urban adoption of electric vehicles. Why isn’t car sharing working? There are lots of reasons that have helped car sharing succeed in some cities and not others.

One reason is perception. Private car owners are habituated to using their car, not just a car. However car sharing can be a great alternative for car owners for cheaper one way trips to transit hubs like train stations, light rail or airports. Transit advocates don’t want to promote anything with the car in it for fear it will continue the 1 car/1 rider gridlock we already face. Meanwhile they miss out on the benefits car sharing offers in removing cars from the road (one study claimed each car sharing vehicle displaced 7 to 10 private cars) as well as the increased deployment of environmentally friendly electric vehicles in car sharing fleets.

City design is also a problem. Bike and pedestrian advocates are right to note that our cities have been created to accommodate cars, not people. Too much space is dedicated for parking private cars and almost none dedicated to car sharing. Where free floating fleets and private cars share curb space, all that paid street parking, and the tickets that go with them, is a revenue stream for stretched municipal budgets. It is in the city’s best interest to make parking permits for car sharing as inexpensive as possible but the momentum is to go in the opposite direction. Most US cities don’t have street accessible EV chargers, unlike many European cities, again making it costlier to deploy EVs in car sharing fleets.

Urban police departments should be encouraged to work with car sharing companies to investigate fraud and help remove dangerous drivers from access to car sharing. My own experience was that some law enforcement officials were excited to work with us, seeing car theft and vandalism as not just car sharing problems but issues that impacted the entire community.

Right now the automotive manufacturers are facing multiple challenges. Imagine each company is simultaneously playing three hands of no limit Texas Hold’em on three different tables. One table is full of electric vehicle competition forcing them to radically change their power train and manufacturing systems, another table is autonomous driving which will reframe how cars are designed, marketed and sold, and the last table is mobility services where ride sharing and the move away from private car ownership is an existential threat. Three tables full of tough competition but only one stack of chips to bet with. Auto companies have to go “all-in” but where? Which bet do they make?

What we’re seeing, especially in North America, is that they are betting on electric and autonomy and not mobility services. The cuts in car sharing and new mobility ventures are designed to help them make the bets while maintaining profitability, something newer competitors like Uber, Lyft and Tesla are less concerned with in the short term. Old school thinking in the automotive companies hopes they can hang on to the historic distribution model and dealer network, and the profit margins that go with it, while they transition to EVs and autonomy. However if they aren’t careful folding the hand at the mobility table may leave the auto companies with the small stack when they go head to head in the next hand.

Place your bets.

Published by Steve Banfield

Kentucky born, Seattle based. Entrepreneur. Team Builder. Photographer.

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  1. The loss of ShareNow (i.e. Car2go and ReachNow) is a genuine tragedy. I’ve been hearing, over and over, that former Car2go members in Portland and Denver (and, I’m sure, people in Calgary and Austin, too) are out car-shopping. And one of my own colleagues at work told me that she was “within a week of selling her car” when the news hit.

    More personal cars…! Not exactly what our cities (not to mention our climate…) need right now.

    Liked by 1 person

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