Big Week for P2P Carsharing

During the past few weeks, we've seen a couple of big developments in peer to peer carsharing:

• Zipcar announced significant investment in P2P startup Wheelz 
• Getaround launches 2 new cities — Portland, Oregon and Austin, Texas — and wins another award
• RelayRides roared back to life announcing a national expansion strategy and new operating policies

Zipcar's investment in Wheelz answers the question many have been asking about what Zipcar's response to P2P was going to be.  Wheelz business model is focused on college and university campuses s it fits with Zipcar existing strategy. At the present Wheelz is operating on only one campus (Stanford), so Zipcar has certainly gotten in on the ground floor of P2P.  Exactly how (and indeed IF)  Zipcar intended to integrate Wheelz into their existing operation and marketing is the next big question.  At this stage I would expect them to let the P2P market develop for a while and concentrate on behind the scenes integration.

Meanwhile Getaround seems to be maintaining its PR lead against other rivals (RelayRides, JustShareIt and Wheelz among others) being bestowed the title "market leader" by consulting firm Frost and Sullivan.  They also announced that Getaround is the recipient of the 2011 Frost & Sullivan Enabling Technology Award, presented to a company that has "developed a pioneering technology that not only enhances current products but also enables the development of newer products and applications".  The press release notes Getaround's new member screening process, "carkit" technology and smartphone app. Just about every carsharing company has some version of all 3 of these.   Getaround, like Zipcar, has done a good job of staking out their claim to technology prowess.  (My 2¢: depending on how it develops, RelayRides partnership with GM/Onstar may ultimately prove to be a much more significant development.)


RelayRides announcement of a national strategy was their attempt to get back in the spotlight.  Another part of the announcement was that they were instituting personal key exchange as an alternative to installing in-vehicle technology (similar to Getaround).  Key swap enables customers to sign up and immediately start renting out their vehicles without the cost or delay of getting technology installed (even the Onstar system is not plug and play).  And it appears that some vehicle owners appreciate meeting the people who are renting their car (and it may even encourage a little better driving behavior on the part of the renters, as well).  As I've said before I've got no problem with "key swap" per se, only that I'd call it car rental, not carsharing, since I don't think key swap offers the customer a level of convenience (unattended access to the vehicle) that constitutes "real"carsharing (i.e. so that it can serve as an alternative to owning a vehicle for a significant number of people).

New York Times Skeptical of P2P

Meanwhile, New York Times writer Josie Garthwaite wrote a Wheels blog entry that raised doubts about RelayRides strategy of going national when only 2 states had personal vehicle carsharing laws in place.

While there certainly are benefits to having a personal vehicle carsharing law in place, I think the article overstates the risk of a P2P company operating in states that have not enacted laws defining personal vehicle carsharing.  The big risk is to RelayRides if they got embroiled in some legal morass about which insurance should apply in a particular claim situation (which is certainly a possibility). However, RelayRides insurance company has signed off on the national approach, so they're the one's really taking the risk, and if there's anyone who has figured out how to profit from risk, it's insurance companies!

In states without P2P laws, it seems to me the biggest uncertainty faced by the P2P company is a possible slower growth rate.  This might occur if vehicle owners worry that their personal auto insurance might be cancelled or what might happen in the event of an accident during a P2P trip.  Depending on how the P2P company addresses this concern, it's posible fewer people may chose not to enroll their vehicles in the service.  RelayRides used to post a video with a long testimonial by a customer whose vehicle was in a major accident during a P2P trip (not sure if it's still on their website or not?)

It's worth noting that no personal auto insurance company that I'm aware of has publicly stated their opposition to the concept of P2P carsharing.  I would like t to follow up with direct interviews with RelayRides members in Massachussetts, which does not have a P2P law, to determine if the risks and uncertainty are as great as are suggested in the article.

What will next week bring?

P2P Carsharing Law Moving Ahead in Oregon

I've been helping coordinate proposed changes to Oregon law to specify insurance requirements for P2P carsharing, which we're calling "personal vehicle carsharing" here.  The proposal is modeled on California AB 1871 and specifies:

• Defines personal vehicle carsharing
• Specifies that the Personal Vehicle carsharing company must provide insurance that is at least 3x the state minimum requirements
• Limits the amount of money a vehicle owner can earn from renting their vehicle out to their maximum of their actual expenses
• Prohibits personal auto insurers from canceling the policy because the owner is participating in a legitimate Personal Vehicle Carsharing program.

I'm pleased to report that HB 3149 has passed the Oregon House Committee on Transportation and Economic Development.  On going details of the progress of this legislation can be found at a separate blog I set up P2P Carsharing Oregon.

This effort is the result of networking by Alan Durning of Sightline Institute in Seattle, and Chris Hagerbaumer of the Oregon Environmental Council, who connected me up with others in the state that were interested in the same changes.

Stay tuned

California Passes Personal Vehicle Carsharing Insurance Law

So-called peer to peer carsharing  (P2P) is one step closer to reality in California with the passage and signing into law of AB1871 introduced by Assembly member Dave Jones.  Referred to as "personal vehicle carsharing" (dare I call it PVCS?) in the California measure, signed into law by Gov. Schwarzenegger today, the law change was needed because California statute specifically prohibited private car owners from renting out their vehicles.

It's not clear how many other states have laws specifically potentially blocking personal vehicle carsharing.  My guess is that even in states where there isn't a prohibition, including some specific rules about PVCS can help minimize lawsuits.

The changes have been moved along by Spride, a California company founded by high investor Sunil Paul, and City Carshare, the non-profit carshare serving the San Francisco bay area.  Spride and City Carshare immediately released a statement praising the passage of the law and saying that vehicle owners enrolling cars in Spride will have access to City Carshare's 13,000 members when the law goes into effect January 1, 2011.  The statement says that vehicles will be outfitted with the same technology as City Carshare uses - the OpenCar telematics unit.

There have been no comments yet from the other California-based P2P carshare startup Getaround or from industry giant Zipcar.   Meanwhile on the east coast RelayRides, the first peer to peer carshare, which has been operating for over 3 months, continues to grow.  (Disclosure: I am an advisor to RelayRides.)

The bill was introduced and moved by Assembly member Dave Jones (D-Sacramento).  Jones is Democratic nominee for California Insurance Commissioner in this November’s election.  SF Streetsblog reports that Jones "worked with car insurance companies from the beginning to craft a solution amenable to them.   Jones immediately said he would enroll his own car in a P2P program - but didn't say whether it would be Spride or Getaround, another California based personal vehicle carsharing service.

The new law is mercifully short and to the point.  Basically, it:
• Defines Personal Vehicle Carsharing as "privately owned vehicles that are allowed to be used by drivers other than the owner as part of a communal pool of vehicles"
• Defines a Personal Vehicle Carsharing Company as one that operates a service and provides insurance at least 3 times the state minimum for personal auto insurance.

Staffer to Assembly member Jones report that getting the insurance industry and trial lawyers on board with the proposed changes were key to the smooth passage of the bill.

The law has a very important proviso that revenue generated can not exceed the expenses of operating the vehicle.  It outlines eligible expenses as lease or loan payments, insurance,  parking, depreciation, fuel and maintenance.

The law also prohibits personal auto insurers from canceling or not renewing a policy, or classifying the vehicle as "commercial or for-hire" vehicle because it is participating in a personal vehicle carsharing program.

I am remiss in reporting that CommunAuto, in Montreal, Canada, announced in July that they would be offering their members P2P carsharing as well.  CommunAuto proposes to take a very low-tech and low cost approach which would not involve any technology installed in vehicles. In order to participate in CommunAuto's program, vehicle owners would have buy insurance from La Capitale General.

I am working with Oregon State Senator Jackie Dingfelder to make changes in Oregon law to facilitate PVCS, as well.  Our efforts are patterned after the California approach, in order to keep things simple for carshare operators, insurance companies and vehicle owners and renters.  I appreciate the help from Seattle-based Sightline Institute.

Full text of the California law and legislative history and analysis can be found here.

The other next big thing: Peer to Peer Carsharing (updated)

(This posting has been updated 10-1-2010 to reflect new information.)

A couple of months ago I had in mind 2 "next big things" - car2go and peer to peer (p2p) carsharing.  I've held off writing about p2p in anticipation that RelayRides would go live and I could talk about it as it actually works not as a hypothetical.  (Full disclosure, I'm consulting with RelayRides.)

Since then p2p carsharing and car rental has been all over the internet — Spride, Gettaround and Go-Op in the US; Whipcar and Wombat Car Club in the UK.  For what it's worth, there's a parallel movement to peer to peer car rental going on, as well — Spagg (apparently now defunct) may have been an example, and there are similar p2p car rental companies in Germany and Australia.)

What is peer to peer carsharing?  It's traditional carsharing using privately owned vehicles temporarily made available to a carsharing company for others to drive.  Like traditional carsharing the vehicles are decentralized, they're available by the hour, and they include gas and insurance in the rates (ideally full insurance coverage, not state minimum coverage).

But first, a point of clarification: some of the services that claim to be carsharing don't actually meet what I would call the minimum requirements for calling themselves carsharing — most importantly lacking "unattended access", through a lockbox or electronic technology.  If you've got to meet the owner to exchange keys at the beginning and end of the trip I just don't see how that will provide sufficient convenience of access for drivers.

Here's why I think unattended access important: if you want to  claim to be carsharing I want to be sure it will deliver the benefits that so many of us have worked so hard to establish over the years — fewer cars on the road, fewer parked cars, VMT reductions, increased use of transit, bicycling and walking. If not, why should local governments support carsharing?   Car rental, even so-called hourly car rental, has never demonstrated these benefits.

Because of the lack of unattended access, in my mind, this excludes Whipcar as real carsharing at the present time.  Fortunately, the major players all appear to be talking about some sort of technology, so, by my definition RelayRides, Spride, Gettaround and Go-Op are bona fide peer to peer carsharing services.  (Caveat, the functionality of the technology offered by each service could be significantly different.  )

Why is peer to peer so attractive?  

Well, it's certainly a good deal for car owners, who can easily make several thousand dollars a year from their car ("Don't work for your car, make your car work for you," as Spride says.)  Need I say more?

For the carsharing member (driver or renter in p2p terms), some adjustments will be necessary — it seems likely that in most cases instead of knowing a couple of favorite vehicle locations near your home or office, you'll have to go on the internet (or ideally smart phone) to locate the cars that are available during the timer period you have in mind; and there may be a little anxiety finding the location the first time, particularly in cities.

For the carsharing company it transforms a major expense (leasing or owning the fleet) into a variable cost that they only pay when the car is actually making money.  And, the lower cost structure means that carsharing can be feasible in less dense, more suburban locations (i.e. lower hours per day utilization), increasing the benefits of carsharing beyond the center city and close-in neighborhoods of the relatively few cities in the US that presently have carsharing.  That's the heart of why I think is peer to peer a next big thing.  

A side benefit of p2p is that, in the same way that using carsharing instead of owning a car (or 2) can be a transition to car-lite lifestyle, renting a car out to others may also serve as a transition to a car-lite lifestyle for vehicle owners.  

Why now?

Until now the hangup in getting peer to peer off the ground has been insurance. The issue has been figuring out whether there's an issue (and how to resolve it, if there is) about where/when the vehicle owner's personal auto insurance policy ends and the carsharing policy begins in the event of a claim.  Apparently, the economic climate has loosed up the insurance underwriters' grips on the reins at insurance companies.  (Whatever it takes, I guess...)

Another reason may be the explosion of interest in the iPhone and smart phones in general, which I think will make finding and booking p2p vehicles much easier and more spontaneious than having to log on to a carsharing company web site at home or work.  And, no doubt, the down turn in the economy got the juices flowing with all sort of unorthodox start ups.

Finally, in this survey of peer to peer carsharing, I would be remiss not mention the unsung pioneer in the peer to peer carsharing world: a little community car club in the UK with the unlikely name of Wombat Car Club.  They figured out the insurance years ahead of anyone else and have a very generous payment plan for car owners.  Thanks for leading the way.

Cash Car

Dan Luke is one of the most creative thinks about carsharing I've ever met, and is a regular contributor to the World Carshare forum. Several years ago he proposed a concept for incorporating privately-owned vehicles into a carsharing fleet that would lower costs for the CSO and share the risk of low utilization, while providing the vehicle owner with continued access to their car when they want it.

When he first described his concept he wasn't aware that a very similar concept had been implemented as a demonstration project in Berlin between 1998 and 2003. It was called Cash Car and was run by an organization called CHOICE. It enabled people who lease new Audi's to temporarily make these vehicles available to StattAuto members when they weren't needed by the owner. Revenues generated would be applied to lease payments. When the vehicle was used, revenues were split between StattAuto and vehicle owner. There were specific requirement set for the minimum amounts of time a vehicle would have be made available in order to participate in the program. StattAuto maintained the vehicle to insure it met their standards.

Dan's concept went further: he suggested that the vehicle owner should also take responsibility for all cleaning, maintenance and repairs. They could even provide their driveway as the designated parking space. As with Cash Car program, revenues would be split whenever the vehicle is used. If the vehicle owner wanted to take a long trip, of course, they would earn less that month. And, since the amount of money they earn is related to how much the vehicle is available, the owner has incentive to recruit members in their neighborhood.

This concept could be implemented quite easily. First, the CSO would specify the makes and models of vehicles they would consider; then they might lease the on-board computer to the owner and specify the service and repair standards and records so the CSO could verify that the vehicle was safe and reliable. Since the owner would be responsible for some of the wear and tear on the vehicle, monthly repair and maintenance costs would be divided up according to the number of miles driven by the owneer and carsharing members.

There's even a relatively simple, although hardly perfect solution, to the insurance problem. The owner could simply cancel their personal auto insurance and put the vehicle on the carsharing policy, having the amount deducted from the the monthly revenue split. Everyone in their household would all became could be carsharing members in order to drive the vehicle - meaning no 18-21 year olds and no loaning the car (to non-members). In this scenario, when the owner wants to use "their" car, they simply go online and schedule their use of the vehicle just like any other member - getting billed nothing for trips in their own vehicle and regular rates for use of any other vehicle in the fleet. And, like any carsharing member they have to return their vehicle on time or face the penalties!

An extreme, but logical extension of this concept would be for the carsharing company not to own any vehicles at all, only handling marketing, membership processing, insurance, scheduling and billing, leaving all aspects of the vehicles to the individual owners - a real "virtual" carsharing company. Such a service could even be formed as a cooperative association of vehicle owners. Of course, it's easy to imagine such ideas, but much harder to write a business plan around them!

Several detailed evaluations of the project, in German, were completed by the (Berlin Center for Social Research describing the project, also in German, is at the link below.

(Editor's Note: Since the post was written the concept has become a reality - peer to peer carsharing - RelayRides, Getaround and Spride in the US, Wombat Car Club in the UK, and Tamycar.com in Germany, to name a few.  Please click on "peer to peer" label below for other posts on this topic.)