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.

  • I like the idea, but…

    If the majority of trips and cars are going downtown, then back to the suburbs, all at about the same time every day (i.e. rush hour), then how much of a market is there really leftover for this? I mean, the only picture I’m getting is a minority of customers who, for whatever reason, need to drive around downtown during regular work hours – and they’re going to find some person’s car in a parking garage and take it out for a few hours..?

    And in the suburbs, people will just walk to their neighbor’s house, not likely close by, to get to the car?

    And does everyone have to find the car’s owner to get their key? I am just really having trouble picturing how exactly the logistics work out with this.

  • Evan

    While I’m sure there will be some logistics issues to work through, I think this is a fantastic idea. I’ve used AirBnb.com, which allows people to rent out unused beds/couches/floor space in their house to strangers.

    I think this is a similar concept. I borrow a car now from my girlfriend and flatmates. But they’re not always around. Why not make my neighbors cars available too, while they’re not being used?

    I would use this all the time, if the logistics could be worked.

  • Peter Smith

    This would be fantastic. I think there are many other startups trying to do similar things.

  • I like this too. I’ve use carshare for years and have wished at times I could ride caltrain or BART out to the suburbs and then use a car to get farther away. This might solve that last mile problem.

    @ Aaron

    You are thinking too small, but I agree that its hard to imagine where exactly this would lead. Using someone’s car while they work is just one possible use for sharing cars. I imagine it like someone’s vacation home. There is plenty of time they don’t use it and therefore they have a rental agency that rents it out when their not there.

    I am sure the key issue would be dealt with like carshare currently does; use a FOB key to get into the car and the key is already inside.

  • stacey2545

    I think there are plenty of trips that are from suburb to suburb. I live and work outside of DC and the majority of my coworkers commute from closer in suburbs or farther out suburbs or they live in the neighborhood. I can see this working for people with reverse commutes (whose numbers seem to be growing in this area). Another use might be weekend trips. Two-car families might not need both cars on the weekend and car-free folks could make use.

    I’m personally car-free in the suburbs, which is a challenge. I’d love to join Zipcar or Carshare if only to be able to go away for the weekend more often, but I know that even my dense-for-a-suburb neighborhood is too spread out.

    I recently signed up for Target’s Earth Day sweepstakes where the grand prize was a new Ford Fusion hybrid. But as a cyclist who lives close to work, I had to wonder if even a “free” car was worth it. As nice as it might be to hit all those weekend getaways the Washington Post reviews, does that justify the car sitting around during the week? If I could share it, it would cover the cost of insurance (operating costs were the biggest reason I switched to cycling) and keep a few more carbon spewing vehicles off the road. Assuming I was ever lucky enough to win the lottery. ^_^

  • Tom Brown

    Is lack of capital restricting growth of shared car services? I thought parking spaces is the limiting factor. Maybe some car and car space owners would be willing to exchange these for a shared car in their space if they get priority reservations (maybe nobody else could reserve it more than x hours in advance).

    A related problem that I’d really like the shared car services to solve that doesn’t have such deep legal problems is vehicles without a fixed start and end location, in other words one-way trips.

    Avego real-time ridesharing avoids the problem by making sure you don’t make too much money http://faq.avego.com/faq/index.php?title=Shared_Transport#Q._Is_it_legal_to_charge_passengers_to_recover_driving_costs

  • Justin

    I use Zipcar about once a month, and bike and take transit otherwise. I think this is a terrible idea because it legitimizes that person driving his or her car downtown, giving him financial incentive to do so. Likewise, those people who switched to transit might now start driving again since it won’t cost as much if they can rent their car out.

    The last thing we need is more cars downtown. In fact, this could put car sharing companies, who are a better model for sustainability, out of business, since personal car sharing would likely be less expensive.

    Instead, let’s have congestion pricing downtown, in turn funding better transit. Keep suburban drivers out of the city at all cost, reducing the need for more roads and parking. As we see with gas price fluctuations, people will not stop driving until it is too expensive and/or too inconvenient. So let’s make it more expensive and less convenient for them, for the good of everyone else! Personal car sharing works against this.

  • I’ll be blogging about this at Shareable.net, with a link back here. You might check out this piece, “Would You Share Your Car with a Stranger?” which explores various peer to peer carsharing efforts (mostly on the east coast) and the business issues they face: http://shareable.net/blog/would-you-share-your-car-with-a-stranger

  • Great story, Jeremy!

  • swissmiss

    I think is a great idea! I have friends that are doing this on an informal basis right now. I have a 2007 car that I have to have for work that I drive 2x per week. (I have to entertain clients and that requires me to drive them places in a nice car.) There is $30,000 of German engineering sitting in my garage that could be utilized by my neighbors as needed. Another neighbor has an empty garage space, imagine a scenario where someone could park their car there as part of a car share and the free space on the street could be a parklet! To have someone manage this where I could say, my car is available from x:00am to y:00pm and get a check at the end of the month would be ideal.

  • cr

    I was in a homegrown carshare in Canada, where the insurance laws already allow for this. It was awesome. We used maintenance records for the last few years to calculate average annual maintenance, oil changes, etc. (The car owner would make a profit if there were no big maintenance issues in the current year, which could offset the cost of a large transmission or engine replacement years later.) We divided the average annual maintenance cost equally, and we split the insurance and annual parking permit. Then we paid for gas as we went along on a per-mile basis. We shared a Google calendar to reserve the car and note where it was parked. Everybody agreed to drive less than 5000 miles per year and not hog the weekends; the car was always available when I wanted it. Much cheaper than Zipcar for in-town bulky item shopping trips and especially out-of-town hiking and camping. Nobody used it for everyday commuting.

  • For NYC, and a few other cities, small two person vehicles, with the newer propulsion systems, are most applicable for the medium dense areas, such as our outer boroughs. For these areas, bus service is inconvenient for the public and the City subsidy per bus passenger on many routes is over ten dollars per ride — on average — according to the MTA. The rental cost of a small public vehicle would be based on Time, Place, and Distance traveled using GPS and could reasonably be under two dollars for local trips to a subway, nearby work, or shopping destinations. Within NYC, it would be the equivalent of the suburban park & ride with a focus on the last mile on the commute. The idea is to provide a convenient and economical alternative to commuting in a traditional privately owned vehicle. If a hundred thousand trips in NYC were changed to these small vehicles rather than the traditional vehicle, we would have more mobility that would be more economical.

  • Peter Winch

    This strikes me as an incentive to own a car, for households which might otherwise go car-free and be patrons of a car-sharing service. If you can own your own car and have the costs paid for by car-sharing patrons, and you live in the suburbs and have parking at home, why wouldn’t you own a car?

    Meanwhile I see negligible additional value for members of car-sharing companies in urban areas. Car availability and convenience are already very strong points for the service. What we need are lower costs–which means more customers.

    This bill may be well-meant; tell me if I’m mistaken but it looks like it’ll have regressive results.

  • Shem

    This is actually a wonderful idea. I did my master’s thesis on the potential of carsharing to reduce auto dependency. Most people have no idea how transformative it really will be as it scales up.

    Some comments here have reservations about this policy such as who wants to let others drive their cars, how would people get access to keys, won’t it incentivize driving…etc.

    There definitely will be many people who don’t want others to drive their cars. This is fine. You only need a very small percentage of drivers to participate to make a HUGE impact. For example if only 1% of auto owners participated, that would provide carsharing vehicles which could easily free up 30% of commuters from needing to own a vehicle (the ratio of carsharing users to vehicles is about 30:1).

    Smartcard readers could easily be installed on privately owned vehicles making them accessible to anyone within a carsharing network. The vehicles could be scheduled for time availability and location according to when the owner needs or doesn’t need their car. The existing carsharing technology could easily manage this.

    Since the largest single obstacle to carsharing growth in new communities is the capital cost of the vehicles, this could exponetially increase carsharing uptake, which is already growing at more than 30% per year.

  • FPPC

    Dave Jones for Insurance Commissioner Campaign
    NAME OF CONTRIBUTOR TO CAMPAIGN- PAUL SUNIL/CEO of SPRIDE
    CITY – SAN FRANCISCO CA / 94117
    AMOUNT TYPE – $6,500.00f
    TRANS. DATE – 5/19/2010

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