Posts about Car Sharing
The vast majority of cars being driven around the city have empty seats. Why not let people sell some of them, make some money, and provide more transportation without more traffic? One of the obstacles is that these services often run afoul of regulations designed to protect consumers.
A few companies are trying to make private ride sharing a reality. SideCar lets anyone sign up, undergo a background check and other reviews, and then become a "community driver" who can offer others rides through the service for a "donation."
This is part of a wave of startups providing what's called "collaborative consumption," where people have an economic arrangement to share a resource. There have been services like time share vacations and Zipcar car sharing for many years, where a company owns some resources and sells shares in them, but the newer trend is companies that try to help individual people sell unused capacity in stuff they own.
Airbnb, for example, lets you rent out your apartment when you're not there for extra cash, and makes it possible to find a much more affordable place to stay in busy cities where there aren't that many hotel rooms.
Regulations, however, often don't really account for individuals renting out their own stuff. They usually assume that anyone providing such services is a company that does so as its business, and can undergo inspections, file for permits, and so on. Plus, these regulatory processes try to ensure that the products are safe and healthy, that nobody's getting scammed, and so on.
The new-style collaborative consumption startups are solving the consumer protection problem in a bottom-up, social-media way: people rate buyers and sellers, and a strong reputation replaces a regulator's review. This is what eBay did to give people confidence in buying things from strangers instead of from stores or established catalog companies.
There are the occasional horror stories, but then, regulators miss things, too. But Airbnb is illegal in most cities, and some cities are cracking down, often at the behest of the hotel industry or neighbors who don't like strangers coming and going. Mainly the transactions happen outside the law's blessing, it's making buyers and sellers happy, not causing a lot of trouble, and eventually cities will probably adjust laws to come to terms with it.
What does this mean for ride sharing? Taxi rides are a particularly heavily-regulated area, with powerful driver lobbies that want to restrict the supply of rides. They weren't happy about Uber, and really won't be happy with ride sharing.
Plus, regulators have some legitimate fears. Cars can be really dangerous. Is it important to give people assurance they're riding in a safe one? You're under the physical control of another person. How can we be sure that person isn't going to do bad things? A woman has accused an Uber driver of raping her; police investigated, but prosecutors aren't pressing charges.
Are these roles the government should play? With Uber, many people argued that regulators ought to ensure the driver is well trained, properly licensed, and not a threat. They should ensure the car is safe and well-maintained. But don't regulate the prices, since people can choose to ride Uber or not and don't need the government to decide how much it should cost.
Now, ride sharing companies are essentially trying to take the next step. Must the drivers all have commercial licenses and commercial vehicles? Or can we let anyone sign up to give others rides? Can the companies, like SideCar, self-regulate?
Certainly it's in SideCar's, and Airbnb's, and Uber's interest to be sure everyone is safe. SideCar has extensive safety information on its site. One theory is that these companies will make sure it's safe, or else go out of business. After all, it's easy to spread a bad experience on Twitter, so even a small number of problems could earn the company a bad reputation.
The DC Taxicab Commission isn't ready to embrace this. Having just created regulations for sedan drivers that regulate much less than they are used to, they'll need more outside pressure if they're going to let ridesharing get an even lighter regulatory touch. And should they?
The Democratic at-large candidates for DC Council, incumbent Vincent Orange, and challengers Sekou Biddle, E. Gail Anderson Holness, and Peter Shapiro, talked about transportation, housing, land use and some social issues at last night's forum at the Black Cat on 14th Street.
Here is the full video from the event:
Small business: As in many forums, most candidates gave few specifics, and in most cases didn't sharply disagree with one another. For example, I asked all candidates to talk about a time they'd helped a local business directly. I asked this first of Vincent Orange, who often touts his work bringing Home Depot to the Rhode Island Avenue Metro area but when talking about small business, speaks much more in generalities.
Orange and the other candidates launched into generic, prepared statements about the value of small business. Sekou Biddle's answer, that he helps them most of all by patronizing them, was the most responsive. Orange was, however, able to name a lot of local businesses once pressed.
Affordable housing: Peter Shapiro had thoughtful recommendations for how to promote housing affordability, drawing on his experience with Arts District Hyattsville when he served in Prince George's County. Perhaps because of his experience as an elected official in the past, Shapiro gave more specifics about actions he has taken or policies he would implement on this and some other issues.
All candidates raised their hands when asked if they would restore the Housing Production Trust Fund; hopefully Orange, in this budget cycle, and whoever wins the race, in the future, follows through on that promise.
Ethics: Shapiro went the furthest on campaign finance reform, criticizing the current council for not taking stronger steps and arguing it should pursue a public financing system for elections. Biddle called for reforms to money order contributions, the source of the latest scandal.
Orange, as he has in the past, emphasized his advocacy for banning outside employment for councilmembers, but hasn't agreed to support limits on corporate contributions. He defended his decision not to cosponsor Mary Cheh's recent campaign finance bill as "self-serving," since Cheh holds other jobs as a law professor at GW and teaching bar review courses. (Tommy Wells, the one co-sponsor, does not have any outside employment).
Transportation: During a section on transportation, it came out that of the candidates, only Sekou Biddle is a member of Capital Bikeshare, and only he and Peter Shapiro subscribe to Zipcar. Biddle even pulled out his CaBi key, on his keychain, and his Zipcar membership card right on the stage.
I asked candidates about how we could help cyclists and drivers better understand each other's needs and concerns. Without being "gotcha" about it, I wanted to give Vincent Orange a chance to speak to what he had learned from the January 1st episode where he parked in the 15th Street bike lane, was called out on Twitter, and apologized. Orange said that he hadn't realized on which side of the white stanchions he should park, and that now he does.
Biddle proposed having driver education include information on how to deal with bicycle infrastructure and people riding bikes. This would only be a small start, since many DC drivers move in from other states, but it was a thoughtful response on the topic.
Biddle was also most able to talk about the role of buses in helping connect communities. I asked candidates to name a bus line that they feel works well in DC, partly to see how many could name a bus line at all. Orange gave an example of a bus line, the X2, but couldn't name it without help from a staffer who shouted it out unprompted.
Holness, marriage, and the Redskins: Dr. E. Gail Anderson Holness, generally considered a long-shot candidate, gave some reasons to appreciate her candidacy, but also some reasons for concern. As a resident of Ward 1, she lives in the most urban neighborhood among the candidates, and says she rides a bicycle and takes many forms of transit regularly. She was able to name many bus lines and talk about them in depth.
However, Holness was the only candidate of the four not to encourage Maryland residents to vote to keep the new same-sex marriage law. She also said on last week's WPFW debate that she supports giving land to the Redskins for a practice facility, on the theory that the master plan calls for recreational space.
The plan does ask for recreation space, but intended to serve local residents, not to be a fenced-off facility that only serves a professional team. I pushed on this issue, asking her why she would fulfill a neighborhood request in this way. She didn't have a good answer and seemed confused by the policy details.
The other candidates all reaffirmed their opposition to the practice facility. Orange said he would support bringing the actual team back and potentially using public funds, if it were part of a plan to create a "livable, walkable" community around the stadium as the District is doing at the ballpark.
"Livable, walkable" actually is a phrase Orange spoke at least 5 times over the course of the debate. It's a testament to the phrase Tommy Wells coined for his campaign slogan, and the policies behind it, that Orange has latched on. Hopefully this means he genuinely supports the principles of "livable, walkable" communities; either way, he clearly believes it's a growing political force.
Kwame's revenge: Speaking of Mr. "Livable, Walkable" Wells, the forum's most dramatic moment came near the end, when Orange suggested that Wells should have at least toned down his criticism of Kwame Brown's Lincoln Navigator scandal, to avoid losing his committee and his opportunity to advance his agenda. Shapiro quickly disagreed, arguing that Wells was right to speak up and that it shows the "dysfunction" in the current council that others did not come to his defense.
Did the forum help you make up your mind? What stuck out as most meaningful to you?
Recent news that Zipcar is losing some of its coveted on-street spaces in DC has sparked discussion about how new competition might impact the region's car-sharing network. Economic theory suggests that the impact on prices and service might not be as large as some hope.
Zipcar currently enjoys monopoly status in DC. Since acquiring Flexcar in 2007, Zipcar has been the only car sharing game in town. Consumers tend to think poorly of businesses that operate as monopolies, even if such firms can take advantage of efficiencies and pass the benefits down to customers. The prospect of three new competitors is welcome news to those who believe competition will benefit all concerned.
The car sharing market will soon morph into an oligopoly: an industry dominated by a handful of businesses and has high barriers to entry. In the case of car sharing, the high capital costs of vehicles and technological infrastructure make it very difficult for all but a few firms to enter the market.
Oligopolies share an important characteristic with monopolies: firms price goods and services not based simply on supply and demand, but in the way that maximizes their revenue, while taking into consideration how their competitors behave. Oligopoly industries are notorious difficult to understand, and game theory scholars have stepped into help explain why these firms behave the way they do.
In a perfectly competitive market, competition among firms brings down prices. In an oligopoly, this is also true to an extent. Consider the case of a well-known oligopoly: airlines. The air travel industry is dominated by a small number of firms and barriers to entry are extremely high. Even so, "fare wars" occasionally drive prices down and yield great deals for consumers.
Car sharing is unlike air travel in one key way: customers are screened for safe driving records, and must be a member of a given company to use its cars. In the case of Zipcar, a potential customer must submit an application that shows that they have a driver's license and have committed no serious infractions behind the wheel. If a potential customer lacks either of these, he or she is ineligible for the service.
Imagine if airlines operated similarly: Before booking a trip, you would have to buy a membership with the airline. You'd only be able to buy fares from those companies where you held a membership. Airlines would still compete for business on price, but in different ways. "Fare wars" would be a much less likely occurance.
In that sense, the market for car-sharing is more like the cell phone industry. Consumers are allowed to sign up with as many wireless carriers as they please; but most pick just one and stick with it. Rates are a major selling point, as are features like service coverage and available phones.
Even with monopoly status in many cities, and the perception of success, Zipcar is not a profitable company. In it's ten-year history, the firm has never turned a profit. Until recently, the District indirectly subsidized the company by offering choice parking spaces at below-market rates.
Arguably, Zipcar was able to pass those savings on to their customers. And with monopoly status, it became a one-stop shop for anyone looking to have access to a shared car. If, instead, the region's 800-some shared cars had been split among four companies, a customer holding a membership with only one service would have access to only a fraction of the total number of cars.
Still, competition will likely mean more total shared cars in the region, which is good from an urbanist perspective. It should benefit the consumer by forcing the industry, including Zipcar, to offer attractive rates and quality service. Just don't expect it to drive down rates significantly or drastically alter the market in the immediate future.
Urbanites in DC and elsewhere frequently utilize rental cars as an alternative to owning their own vehicles. However, without an auto insurance policy, some renters may be putting themselves at more risk than they realize.
In Washington, roughly a third of households don't have access to a vehicle, but plenty of these people still drive, if only occasionally. Car sharing services like Zipcar are great for quick trips and errands, while traditional rental cars from companies like Enterprise and Hertz often work better for weekend getaways and out-of-town trips.
While Zipcar is designed with non-car owners in mind, the traditional rental car system is set up for people who already own cars, and by extension, carry auto insurance. For those who don't, the insurance options available can be expensive and difficult to understand.
Auto insurance is typically divided into two basic risk categories: collision/damage and liability. Collision coverage usually takes care of damage to or theft of the car; whereas liability insurance covers the damage to another person, their vehicle, and their property, in the event of an incident.
Of the two, liability is the much bigger risk.
Collision risk is essentially capped at the value of the car a person is renting. If they wreck a rental car, without insurance, they're on the hook for paying for that vehicle.
That's an expensive proposition, but it's relatively small compared to the theoretically limitless risk they face in the event that they injure or kill someone while behind the wheel. These days, personal injury attorneys are constantly on the hunt for victims who were hurt or disabled in these types of incidents.
Rental car companies do offer products that protect their customers from both collision and liability risk, but these products are expensive. Enterprise, for example, offers damage waivers for $13.99 - $18.99, and supplemental liability protection for $11.99. That adds an additional $26 to $31 per day to a car rental. In some cases, the price of the insurance and waivers can cost more than the rate for the car itself.
For this reason, travel advisers sometimes say it's best to decline the add-ons that rental car companies offer when you step up to the counter. It's often believed that insurance products are profit-centers for rental companies and bad deals for the customer. This may be true, but only if the customer already carries a good insurance policy.
What about credit cards? Many renters mistakenly believe that their credit card offers adequate protection. But again, if you don't have your own auto insurance, this isn't the case.
Most credit cards offer a type of "secondary collision" coverage, which kicks in only after you've filed claims with your "primary" insurance provider. That might be your auto insurance policy, if you have one, or your homeowners or renters policy, in the event of damage or theft.
Even when credit card coverage does take effect, it might only cover damage to the car you are driving. When I looked at the fine print of my own credit card, I found that the protection is indeed rather limited. It reads:
This coverage is not all-inclusive, which means it does not cover such things as personal injury or personal liability. It does not cover you for any damages to other vehicles or property. It does not cover you for any injury to any party.Even the "premium" coverage American Express offers, which costs the cardholder an additional $25 per rental, doesn't cover liability risk. The main benefit to AmEx's premium coverage is that it is "primary," so if you do need to file a claim, your auto, homeowners or renters insurance provider doesn't need to handle it, and won't raise your premiums as a result. It's also usually less expensive than the waivers offered by the rental companies.
Many insurance companies offer a product called a "non-owners policy," also referred to as a "named-operator policy." This is auto insurance for people who don't own their own cars. Information about it can be difficult to come by.
I called auto insurance companies who advertise in the area, who then referred me to agents in DC after hearing my ZIP code. After being passed from one person to the next, I eventually got some answers about this product. One agent in DC explained that these policies are often required by law for people who have lost their drivers licenses for one reason or another, and that the premiums can be very high.
When I asked if I could receive a quote, he explained that the average cost of a non-owners policy in DC is roughly $600 per year. He talked me out of getting a quote, recommending instead that I buy insurance through the rental car companies, as the non-owners policy wouldn't offer savings or give me better protection.
For car-free renters, insurance options are limited. Buying supplemental liability protection from rental companies is virtually necessary, unless you are comfortable with the bare-bones, state-mandated level of liability coverage that rental companies are required to provide when you drive off of the lot.
Collision coverage can go either way. For 100% guaranteed protection, you can purchase the damage waivers offered at the time of rental. If you're willing to take on some risk, the secondary coverage offered by most credit cards might be enough to cover your bases.
For car-free renters, the key is homework. Even though the options are expensive, simply assuming that your credit card covers you may be a riskier move than you're willing to take.
Car2go, a subsidiary of Daimler, is looking to bring its "point to point" car sharing model to DC, with about 300 cars possibly as soon as this fall.
With a car sharing service such as Zipcar, you reserve a car that lives at a certain spot, use it for a while, then return it. This is very useful to let car-free residents run errands that require cargo capacity, or take trips out of town. But each Zipcar needs a dedicated parking space. When a car is out, nobody else can use that space, and that car might spend some time sitting parked when nobody else can use it, either.
Car2go's model doesn't have designated spaces. Instead, cars are just parked at various places on the street and in garages. If you want a car, you use the web, a mobile app, or call into a call center to find out where nearby cars happen to be parked. Then, you go to one, unlock it with a code, and drive it.
When you're done, you just park it anywhere on the street, even in a wholly different neighborhood than where you picked it up. Car2go is working with DC to allow cars to park in RPP zones across the city, on the logic that the cars will serve those residents in RPP zones who don't have their own cars. They will also work out deals with garages in downtown areas.
They already run service in Austin, Vancouver, and in the German cities of Hamburg and Ulm. San Diego is starting up soon with an all-electric vehicle fleet. (DC's wouldn't be electric at first, since we don't yet have the infrastructure for charging the vehicles.)
In Austin, the service costs 35¢ per minute for short trips, plus tax. Once you hit $12.99 in an hour (which takes 38 minutes), then it's a flat $12.99 an hour, and a maximum of $65.99 per day. There are also charges for driving more than 150 miles.
Like with other car sharing services, car2go pays for gas, insurance, maintenance, and all parking. There's only a $35 one-time fee to join, with no annual fees. They anticipate using the same pricing in DC as in Austin.
Zipcar, by contrast, costs $25 to join (less) but $60 a year (much more). Hourly rates start at $7.75 (less) but require 1-hour minimums, and the daily maximum is a bit more.
In many ways, car2go compared to single-passenger vehicles is analogous to Capital Bikeshare versus owning your own bike. Single-passenger biking requires storing the bike at home, and parking it at the destination. If you bicycle one way, you have to then ride the other way (or leave the bike at work, or take it on Metro or a bus). The same goes for driving.
With car2go's model, as with Capital Bikeshare, people can use cars for one-way trips and use transit, bicycling, walking or something else for other legs of the trip. Like Capital Bikeshare, people who own cars might even find it useful to take car2go, such as if they're out somewhere and want to drive back, or need to get somewhere fast and can't find a cab but would rather not park at the destination all day and can ride transit back.
However, also like Capital Bikeshare, I wonder about cars ending up congregated in certain areas and not available in others. Car2go business development manager Adam Johnson said that they don't anticipate this being a big problem, however, and it hasn't in their other cities. I'm still skeptical, though.
Johnson said cars "tend to gravitate" toward areas where many people use them. Will that mean cars will be difficult to find in other areas? They clearly realize the political importance of serving all parts of the city, and Johnson said they will definitely have cars east of the river, for instance. In fact, he said, car2go's service "generates a lot more accessibility" for people in those areas, where there are few taxis.
But what if someone parks a vehicle in a low density area where there are few members and so the car won't get taken the other way? Or what about all cars flowing toward downtown in the morning and away at night? Johnson said they can do some redistributing, but generally don't have to. He added, "The onus is on us to make sure we have members everywhere."
The spur-of-the-moment nature of car2go might encourage many people to use it who might not use something like Zipcar. Zipcar is great, but there are some psychological barriers. You have to reserve more than enough time to get the car back on time, since someone might be using it after you and you'll get hit with a penalty if you're not back.
When I've used Zipcar, that's sometimes created some stress, where I know I have to leave at a certain time and worry about traffic. It's a feeling somewhat like having to go catch a plane, and it can be unpleasant. With car2go, that's not a concern. Car2go does allow making reservations, though they say most people don't actually end up making them.
What effect would car2go have on traffic? It's great that Capital Bikeshare is lowering the barrier to biking, because it's good for the city to have more people biking. Biking takes up very little road space compared to driving, and the more people ride, the safer it is for everyone.
We don't want to encourage more car trips. Drivers don't want them because the more people drive, the worse the traffic. Non-drivers don't want them because more driving hurts air quality and often makes roads less safe.
Even though it's a service about providing cars, Zipcar actually reduces overall driving. When they opened in Baltimore, the members who joined started walking, biking, and riding transit more. 38% reported taking more than 5 car trips in the previous month, but then only 12% did in the last month, according to a Zipcar survey.
Johnson says car2go hasn't yet been able to collect similar statistics on the effect of their service on driving, but that they believe they, too, lead to reduced car usage and more transit, biking, and walking.
Car2go also has an API for people to be able to integrate it into other web, mobile and other apps. That's important because we're going to see more and more multimodal trip planners, information screens, and other services in the future, showing people all of their travel options from buses to bikes to cars.
More travel options allows us to make more efficient use of our road network and scarce land. Like Zipcar, car2go has the potential to allow far more people to use each car, reducing unsightly or expensive parking space and saving families a lot of money in loans and maintenance.
When people can choose at a moment's notice between a bus, Metro, walking, their own bike, a Capital Bikeshare bike, a Zipcar, a car2go car, and more, living without cars or with fewer cars per person becomes much more convenient and achievable.
Update: Here are a few additional points about the car2go model that some commenters have asked about:
- Can you just take the car to an office in Herndon and leave it there until evening? No. There will be an initial boundary where you have to end each rental, perhaps the borders of DC. You can drive outside, but have to end inside.
- What about meters? Johnson said they're still trying to figure that out. If they don't get permission to be at meters but can park in RPP zones, they can just arrange enough garage spaces downtown, and in neighborhoods there is enough room on RPP blocks.
- Will cars get parked in rush hour only zones and then towed? Users will have to end a rental at a space that's legal to park in all day, not a rush hour only space or something of that nature.
Also, Johnson said in a followup email that they don't see this as an "either/or" between Zipcar and car2go. In fact, he suggested, many people who might not sign up for Zipcar might now do so because combining the two gives more flexibility.
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