Car Sharing Widens the Lanes of Access for City Drivers

Behind Valencia Street's widened sidewalks and bike lanes, San Francisco has another tool ready to cut traffic and transit crowding. Nestled in the neighborhoods surrounding this longtime transportation corridor are hundreds of parked cars—available for sharing.

Brian Scates, creative director at a Silicon Valley startup, rented out his 2000 Audi All-Road last year for $50 to $60 a day, rather than let it sit unused while he biked around town and commuted to work by train. Meanwhile, Sebastien Rouif throws his surfboard into the back of his neighbor's pickup truck on Saturdays to drive down the coast and catch some waves. The fee and gas total about $40, cheaper than other rental options—and it's a lot less expensive than owning a car. (Related Pictures: "Twelve Car-Free City Zones")

Scates has since cut back on sharing his car, but still believes in the idea: "I'm all about fewer cars on the road, and maximizing the value that we get out of those vehicles."

Scates and Rouif, who both rented through Getaround, a car-sharing network, are in the vanguard of San Francisco residents who have given peer-to-peer car sharing a whirl. P2P, as it's known, aims to help address transportation problems by mining a largely untapped resource: Most cars sit unused most of the time. At least 30 companies worldwide are offering P2P car sharing, which enables short-term access to personal vehicles in a way that is convenient, smartphone-friendly, and cheap.

The system is not without its problems. Sharers have to be willing to tolerate additional wear and tear on their vehicles; for some, that alone is a deal breaker. And though a few states have passed laws establishing rules on car-sharing insurance coverage, liability issues remain.

Still, cities like San Francisco—feeling the strain both of too many cars on the road and crowded public transit—are taking steps to encourage car sharing. Indeed, they echo the P2P startups in touting the business opportunity inherent in helping people to consume less through sharing. (Related: "The City Solution")

"If you ask how to transform a car from a product into a service, you get a whole new economy," said Shannon Spanhake, deputy innovation officer for the City of San Francisco. (Related Quiz: "What You Don't Know About Cities and Energy")

Community Cars

Car sharing isn't entirely new. One program begun in a Swiss housing cooperative in 1948 continued for 50 years; individuals who couldn't afford a car on their own instead gained mobility by sharing a few vehicles. A series of car-sharing experiments were launched in the 1970s in Europe, after the Arab oil embargo caused worldwide energy prices to skyrocket. But one of the earliest studies on the concept concluded in 1969 that "community garages" never would work in the United States because cities here had "numerous rivers" of highway and "oceans" of parking space to accommodate individual car ownership.

Four decades later, with jammed highways and astronomical parking prices a near-universal feature of life in U.S. cities, a few nonprofits and businesses have begun to see opportunity in offering car sharing as an alternative. (Related: "Five Signs California Is Ditching Its Car Habit")

A leader in the movement was Zipcar, the 12-year-old membership-based network with some 730,000 users in 20 cities and college campuses in North America, Spain, Austria, and the United Kingdom. Peer-to-peer car sharing embraces the Zipcar idea—short-term rentals and convenience enabled by mobile technology. But P2P takes the concept a crucial step further by cutting out the expense of keeping a fleet of cars as well as maintenance crews and dedicated parking spaces.

Network members list their own cars for rental. Carless city dwellers join to gain occasional access to a set of wheels. The car-sharing company typically screens renters and vehicles, offers a platform for matching up car owners and drivers, facilitates payments (while taking its cut), and provides insurance.

Car sharing can be relatively low tech. For many RelayRides and Getaround sharers, for example, the car owner meets the renter in person, checks the driver's license, offers a quick orientation on the car, and hands over the keys. But many companies use technology to allow the rentals to take place without such face-to-face meetings. RelayRides can enable keyless access if the car owner subscribes to General Motors' OnStar service.  Wheelz has its own technology (and Getaround is deploying a similar device) to enable renters to unlock strangers' car with apps on their smartphones.

Wheelz, which started out on college campuses but rolled out to the general public in San Francisco last month, says it installs $100 to $200 worth of proprietary gear under the dash of each car in its network, not only for keyless entry, but for tracking vehicle location and calculating fuel use (the cost of which is then added to the driver's tab). Many of the car-share companies also plug into the power of social networks to enhance trust; they have online communities of users where car owners and renters rate each other publicly, following the eBay model. (Related: "California Tackles Climate Change, But Will Others Follow?")

Advocates of peer-to-peer car sharing see these services as part of a larger trend, known by turns as "collaborative consumption, the "sharing economy," or simply, the "mesh." The idea is to turn goods into services, through an economy built on "accessing" cars, bicycles, power tools, homes, workspaces, or garden plots. (Related: "Bike Share Schemes Shift Into High Gear") The epitome of the notion is the rapidly growing Airbnb marketplace for sharing apartments, houses, and other spaces, which has expanded in four years to 26,000 cities in 192 countries.

Peer-to-peer car sharing has caught fire around the globe, expanding to more than 30 companies worldwide, up from only a handful in 2010. Investors are betting that peer-to-peer car sharing is an idea whose time has come. RelayRides has a slew of venture capital backing, from Google Ventures to General Motors Ventures. In August, Getaround announced it had attracted $13.9 million in funding, including from Google co-founder Eric Schmidt's Innovation Endeavors, Yahoo chief executive Marissa Mayer, and actor Ashton Kutcher.

Among the backers of Wheelz is the car-sharing giant Zipcar. The companies portray the services as complementary rather than competitive. Wheelz chief executive and co-founder Jeff Miller says vehicles in the Wheelz network are priced, on average, about 10 to 15 percent lower than comparable Zipcar vehicles. That's not a huge discount; what distinguishes Wheelz cars is their convenience, he said. "The cars are where people live. They're in your neighborhood, they're across the block." Plus, he added, "It has sort of a feel-good ethos to it," because the cars—and much of the fee—stay within the community. (Wheelz takes 40 percent of the rental fee, while the owner keeps 60 percent.)

General Motors is not the only automaker that is taking the trend of access over ownership seriously. Car2go, a program from the German automaker Daimler, allows members in 15 cities and five countries to borrow pint-sized Smart Fortwo cars. Similar networks have been set up by BMW in San Francisco and four German cities, and by Renault in France. Sydney, Australia, is now home to more than 9,000 car-sharing members, and by 2016 the city aims to boost car sharing among its residents to 10 percent of all households. The city is supporting the trend by offering convenient curbside parking, particularly in urban renewal areas. (Related: "Coal-Fired Australia, Buffeted by Climate Change, Enacts Carbon Tax")

Evolving Rules of the Road

The rules of the road are still evolving.

"There are all these apps and other ways of accessing transportation within cities, which are all part of the solution, but it's getting ahead of policies," said Rick Hutchinson, chief executive of San Francisco Bay area's pioneering nonprofit car-share service City CarShare, at a recent panel discussion.  For instance, regulators in California and New York City have recently clamped down on operations of several companies they said were acting essentially as unlicensed taxi services, enabling citizens to hail and pay for chauffeured rides by smartphone. (Related: "To Curb Driving, Cities Cut Down on Parking")

For peer-to-peer car sharing, one of the trickiest questions has been insurance coverage. California, Oregon, and Washington State all have passed laws within the past two years aimed at ensuring drivers are covered (generally by the car-sharing company and its insurance partners), while protecting the vehicle owner from the risk of losing his or her own insurance coverage.

In U.S. states without such explicit law, insurance companies that write personal auto insurance typically view car sharing as an invalidating commercial use of a vehicle. In Boston earlier this year, a RelayRides renter died and four riders in the other vehicle were severely injured in a crash where lawyers anticipated the claims would surpass the $1 million insurance provided by the car-sharing company. Who will ultimately pay the balance will depend on the outcome of wrangling among insurance companies and, possibly, the courts. But a New York Times report on the case in August noted that the owner, who received a check from the car-sharing service insurance to cover the cost of replacing her car, immediately listed her new vehicle on RelayRides.

But are there enough enthusiastic car sharers out there for P2P to grow into the kind of business its investors envision? In San Francisco, a hotbed of P2P activity, only about 1,500 of the city's 400,000 registered cars are shared vehicles, said Timothy Papandreou, deputy director of sustainable streets planning and policy for the city transit agency. The city is actively crafting a strategy for supporting—and regulating—sharing of "anything that moves," he said, from cars to electric scooters, and a much-anticipated bicycle-sharing service rolling out in January. Papandreou says that if the number of shared vehicles in San Francisco increases fivefold, total car ownership could potentially drop by an estimated 25 percent. That would ease crowding on roadways, and hopefully, on the city's strained streetcar and rapid transit system. "Everything comes down to transit crowding," he said. "Our transit is at peak capacity."

Whether P2P can take a bite of city transit problems will depend on the experience of the sharers. Sebastien Rouif, the surfer, who works as a transportation analyst with the French consulate, has tried to persuade his roommates to list their cars on Getaround. In addition to helping the concept to spread, it would also enable him to borrow their vehicles and be covered by Getaround's insurance. So far, he said, they are not convinced.

Scates found that renting out his Audi through Getaround allowed him to bring in about $1,200 over the course of a year, offsetting a portion of the $300 per month he was paying for parking. "Everyone was nice and most of them brought the car back without issues, and had it clean and full of gas," he said. "Only one renter ever brought it back dirty and not full. I'd say it was 90 percent positive."

Still, there were downsides. "The individual renter is spending time handing off keys and coordinating rentals, keeping the car full of gas and clean, getting it serviced more often, and dealing with increased repairs," Scates said. "So even with the extra income, there are tradeoffs."

Once, his Audi came back with a broken cigarette lighter; another time there was a broken air spring in the suspension system. Because of the problems, and the fact that he no longer pays for parking (he now parks his car outside the city), Scates dropped out of active sharing. He doubled his rental rate, and has had no takers at the new price. Nonetheless, Scates says he'd still recommend the service to recoup some of the cost of keeping a car in a city like San Francisco, especially for "for folks who aren't emotionally invested in their cars."

The ranks of such drivers may well be growing, with statistics clearly showing that younger Americans are buying fewer cars and driving fewer miles than their peers in previous generations. Networks like Getaround, RelayRides, Wheelz, and others are betting that in the next chapter of the American love affair with the automobile, drivers will be less smitten with the vehicle, and more devoted to sharing the ride. (Related Pictures: "Cars That Fired Our Love-Hate Relationship With Fuel")

This story is part of a special series that explores energy issues. For more, visit The Great Energy Challenge.