California Poised to Allow Personal Vehicle Sharing Services

Car sharing is a growth industry, as pioneer City CarShare would tell you, and it has beneficial environmental and economic impacts. Studies of car sharing services like Zipcar and City CarShare show that for every car that is shared, up to 15 private vehicles are taken off the road. Owning and operating a personal car is the second-highest family expense behind owning a house, and the highest expense for people who rent.

The car sharing model, however, is predicated on operating in dense urban areas where there is good transit and a large pool of prospective customers who don't want to own a car. On the other hand, it doesn't make financial sense for car sharing companies to operate in suburbs or rural areas. Not yet, at least.

City CarShare is trying to pioneer personal vehicle sharing, where car owners would make their vehicles available to a pre-screened pool of personal vehicle sharing participants during the periods of the day when their car is not in use, which for many vehicles is upwards of 90 percent of the time.

If you drove to work in San Francisco and left your car idle from 8 am to 6 pm, for instance, you could allow a pool of prospective vehicle share participants to use your car, for which you would make enough money to cover the cost of usage. If you consider the cost of owning and insuring your car to already be a sunken expense, this could be a way to "make" money for a commodity that is otherwise depreciating in value.

Of the many challenges to expanding car sharing to privately owned vehicles, the first obstacle is current insurance law. In most states, unless you are commercially licensed or you operate a livery service, receiving compensation from others for using your vehicle voids your personal car insurance coverage.

To this end, City CarShare has been working with California State Assemblymember Dave Jones (D-Sacramento) and Spride Share, a new company started by cleantech financier Sunil Paul of Spring Ventures, to draft Assembly Bill 1871, which would change insurance law to permit remuneration for personal vehicle sharing.

"The idea is to make it possible for people to participate in car-sharing programs," said Assemblymember Jones. "This is part of a package of approaches that look at ways we can engage insurance companies in a positive way to encourage better environmental behavior."

If successful, personal vehicle sharing could expand the car share model to regions poorly served by transit, offering those who don't want to own a car or those who can't afford a car the ability to be mobile. It might even alter the national narrative of personal car ownership, say proponents, shifting the way consumers view cars, so that vehicles are less extensions of one's personality and more about getting from place to place.

"Personally owned vehicles, especially in America, are highly identified with status," said Rick Huthinson, City CarShare CEO. "We're hoping that the perspective of cars as an aspect of status, as something you have to have, is becoming less of an issue."

Personal vehicle sharing services could be administered through an established car-sharing service like City CarShare, or it could eventually be done through personal and professional networks like Facebook and LinkedIn. Participants would be screened by the DMV to assure a good driving record, just like they are for current car-sharing businesses.

Assemblymember Jones echoed Hutchinson's sentiment about the significance of the initiative, saying "I think it's revolutionary. If we can move to a place where people are able and are encouraged to share their vehicles, we will reduce the number of vehicles necessary and will provide for more efficient vehicle use."

Getting to the point where the public accepts the idea of sharing their private cars with the wider community, however, will be a challenge, one Spride Share CEO Sunil Paul thinks can be surmounted with the technology we already have.

"We believe there is a way to dismantle the idea of personal car ownership and turn it into a shared resource," he said. "Our overall vision is to replace private automobiles with private cell phones."

Paul said he hopes the public eventually sees cars as a service and not a commodity and he drew analogies to cloud computing or commercial building leases.

Paul, who made a fortune in anti-spam software, became interested in personal vehicle sharing after completing research for the Gigaton Throwdown, a project that asked whether the U.S. could scale up clean energy solutions and reduce one gigaton of CO2 by 2020.

According to Paul, the Gigaton Throwdown study showed that replacing the entire fleet of gasoline vehicles in the U.S. with electric vehicles was "practically impossible" within a reasonable time frame.  "It's very difficult to scale up solutions to transportation problems around climate and energy security," said Paul. "We started looking for opportunities that could deal with transportation problems without building entirely new cars."

While the current bill introduced in the California Assembly would only allow vehicle owners to cover the costs of sharing the vehicle, including insurance and depreciation, Paul hopes the legislature will alter the language so that vehicle owners could actually make more money out of the venture.

According to Jones, the bill will go before the Insurance Committee on May 5th and then to the full Assembly shortly thereafter. He said he has been working with insurance companies to draft the bill and doesn't believe there will be significant resistance.

Assemblymember Jones will hold a press conference in San Francisco today at 12:30 p.m. at ABC Lot #59
, 850 Front Street.