Car Sharing: Future Looks Bright, Even With Some Cloudy Legal Issues

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There’s just no stopping the sharing. Despite recent legal challenges to certain “peer to peer” car-sharing services, the range of sharing options keeps on expanding, making it easier and easier for consumers to skip taxis, traditional car rentals — and car ownership in general.

Last week was quite the roller-coaster ride for peer-to-peer car-sharing service RelayRides. First, the company, which arranges for drivers to borrow cars owned by other members for $5 to $20 per hour, announced it had purchased a car-sharing competitor called Wheelz. The move not only expands the reach of RelayRides, it also opens up the possibility of incorporating the Wheelz technology known as DriveBox, which allows cars to be rented and driven away via app — no swapping of car keys required. As the company eliminates hassles and attracts more renters and car owners to participate, the potential for the business model soars, as explained in Fortune:

“Our vision isn’t to stop at the car-rental market,” says RelayRides CEO Andre Haddad. “It’s really to help disrupt the concept of car ownership by enabling people to rent cars whenever they need them and access [cars] on a need-basis rather than having to buy one.”

The company’s lofty goal is to be able to offer a RelayRides car within a 10-minute walk of 100 million Americans by the end of 2015.

That goal may be slightly harder to achieve thanks to the second bit of big RelayRides news that took place last week. As Haddad related in a blog post, RelayRides suspended all operations in New York State as of Thursday because the Department of Financial Services “believes there is noncompliance with certain unique aspects of NY insurance law.”

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The Wall Street Journal reported last week that SideCar, a ride-sharing app, likewise was forced to suspend its service in New York City after a judge indicated SideCar drivers were essentially operating taxis or car services without a license — which is illegal. Officials in other cities have voiced similar concerns. “With services like SideCar and Lyft, you are talking about being completely unregulated,” Ed Reiskin, director of the San Francisco Municipal Transportation Agency, told the San Francisco Chronicle in late 2012. “Things like insurance and background checks are completely absent.”

SideCar, Lyft and Uber, another ride-sharing service, were each fined $20,000 last fall by California authorities for operating taxi services without the proper permit, and SideCar has been subjected to threats and undercover investigations in cities such as Austin and Philadelphia.

Naturally, all the businesses involved claim that their services are legal, and that the forces trying to hold them back are old-fashioned and backward and don’t understand what these companies do. “Innovation, by its nature, does not always fit within existing structures,” Haddad wrote in his post announcing the service suspension in New York. “We remain committed to the democratization of car sharing.”

“SideCar is not a taxi company,” SideCar CEO Sunil Paul wrote in a response to the Austin Transportation Department, which accused the company of being an illegal taxi service in violation of city code, before delving into more philosophical prose:

Innovation is under attack. Innovators have always faced opposition from traditionalists who are threatened by new ways of thinking. Battles may ensue but in the end innovation will win.

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History tends to agree. Besides, peer-to-peer is but one part of car sharing. More traditional sharing services like Zipcar, which own vehicles and rents to members by the hour, are embraced in many municipalities and face no questions regarding legality. Here are a few reasons why all manner of car sharing may be in your future.

Sharing Is Spreading
Last summer, when RelayRides was featured in TIME, the company had roughly 1,000 vehicles in its network. After acquiring Wheelz, RelayRides boasted a marketplace with “several thousand cars in more than 1,500 cities in all 50 states.”

Meanwhile, Zipcar, the biggest car-sharing service — which was purchased by Avis a few months ago — has continued to grow. In mid-May, it launched in Minneapolis, the 21st major metropolitan area with Zipcar. A couple of weeks prior, Zipcar opened locations in eight major airports in North America, after already offering the service at the three New York City–area airports.

What could really make Zipcar at airports take off, so to speak, would be the possibility of one-way rentals. For now at least, all Zipcars must be dropped off in the same spot they are picked up — meaning it’s not possible to use a Zipcar as an alternative to a bus or taxi as a ride to or from the airport.

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In a select few situations, car-sharing services are available to and from airports. As of early April, Cars2Go, for instance, allows members to pick up and drop off vehicles at the airport in Austin, though there’s an extra $5 charge. And Hertz on Demand, the rental-car giant’s car-sharing service, allows one-way rentals at New York City airports.

Speaking of Airports and Taxi Alternatives …
Lyft, a San Francisco–based ride-sharing app, is one of several services being touted as possible cab substitutes — to and from airports, around town or even on long-distance trips. Zimride, Lyft’s sister brand, has reportedly been coordinating 2,000 rides per month between Los Angeles and San Francisco. With both of these services, owners agree to pick up riders on preapproved routes (usually for some fee, of course). While there are some concerns about strangers riding in your car, you don’t have to worry about a stranger driving your car.

Another Bay Area outfit, FlightCar, invites car owners to loan out their vehicles while traveling. In exchange for free parking at the airport and free curbside valet service, plus gas money and a car wash, owners agree to allow FlightCar to rent the vehicles out to paying customers. The service is expanding to the Boston area as of May 23.

A similar service called Hubber is launching this month in the vicinity of Los Angeles’ LAX airport. The Los Angeles Business Journal explained how the service might work for owners, as well as the tourists using the owners’ car:

When the couple is ready to leave for their trip, they drop their car off at a Hubber-approved car lot near LAX. The tourists then pick up the car from an attendant when they arrive in town and return it to the same lot before they leave.

(MORE: Rental Nation: Huge Growth of the Sharing Economy)

Besides free parking, a car wash and a full tank of gas, owners can expect to earn at least $10 per day by agreeing to Hubber’s terms.

Simple, Prepaid Downtown Parking
While many car-sharing services specify that vehicles must be parked only in designated spots, other operations give drivers more freedom. Cars2Go has worked out arrangements with cities such as Austin, Seattle and Portland, Ore., that allow members to leave the company’s SmartCar rentals in on-street metered parking spots without having to feed the meter. In many cases, drivers can also park in areas where spots are usually reserved for residents only.

The Minneapolis Star-Tribune reported recently that Cars2Go is proposing a fleet of 250 SmartCar short-term rentals for the city, with on-street parking spots included for customers at no extra charge. Cars2Go spells out the parking rules for each city, though in most cases the company has arranged so that customers have a wide range of options and don’t have to cough up extra money to park.

On the other hand, one Seattle Times writer who has been testing Cars2Go in the city complained that the service was far more expensive than he anticipated. “The bus remains a far more reliable and affordable way to get around Seattle without a car,” he noted.

Extended Electric-Car Test Driving
While the vast majority of drivers are reluctant to purchase purely battery-powered cars like the Nissan Leaf, a far larger percentage of consumers is curious about the technology. Taking an extended test-drive of an electric vehicle via a car-sharing service is a way to satisfy that curiosity with a bare-minimum commitment.

(MORE: Tesla Beats the Odds — and the Haters — But Now Comes the Hard Part)

The options for electric-car loaners include Nissan Leafs from Hertz on Demand and electric SmartCars from Cars2Go. A new beta, invite-only program in Las Vegas called Project 100, meanwhile, allows members to get behind the wheel of a Tesla Model S, the much raved about premium electric sedan. Alternately, depending on where members want to go in Vegas, they can also be picked up in a Tesla by another driver or hop on a bike or party bus within minutes of opening the project’s app.

5 comments
carmelasora
carmelasora

qui  italia il Car-scharing non ha avuto molto piede per un sacco di problemi di assicurazione, e comunque meglio il Noleggio auto Alghero anche perché risulta sempre sicuro e conveniente

BrettRothenberg
BrettRothenberg

The larger current issue is a disconnect between insurance companies and the ridesharing concept. taking a donation or fee turns the ride into fraud, if an accident were to happen, these companies excess liability insurance plans are invalid and the driver would be personally responsible for all liability, medical, collision, and comprehensive coverage out of his/her own pocket. This is just part of the safety issue. Sidecar did not even inspect my vehicle.. Lyft does not regulate what cars are on the platform, most are old/unsafe, they do no checks to make sure the car has no CEL, brakes, good tires, just basic headlights, smell and appearance.. Taxi's are looked at min 4 times per year.. these ridesharing cars are seen once and never seen again.. the drivers are also 1099'd and are not able to be drug tested or tie'd into the local DMV.. outside of LA/SF most major cities are claiming these to be illegal and shutting them down.. its a great concept but is very grey and needs regulation. I have plenty of links and scans of the insurance policies from major carries (state farm, usaa, etc) showing the rides are fraud.. much like napster.. once you finish the ride (if you do pay) the ride becomes a fraudulent ride.

StephenMcCurry
StephenMcCurry

I disagree with the outlook on peer to peer car sharing. I agree that other forms of sharing are gaining traction but there are fundamental issues with the p2p market that will be difficult to overcome. It would be interesting to know what % of the RelayRides cars are actually rented and how frequently. I've had a low response rate from vehicle owners in my neighborhood - http://stephenmccurry.tumblr.com/post/50543525592/future-of-car-sharing

ShareSavannah
ShareSavannah

@StephenMcCurry Stephen - your points are well-taken, and it will be interesting to see how this progresses. I'm starting a p2p service in Savannah, GA, and trying to provide a different solution to all these issues.