Transport as a service: are we there yet?

Autonomous cars is one of those tech topics we all love to speculate about. There’s little doubt that autonomous cars will rule our roads at some point in the future, but the question is when. Elon Musk claims his company Tesla will have a level 4 autonomous car ready by 2019. There are five levels, so level 4 means the vehicle can drive itself in all but a few environments. Clearly then, a lot of technical progress has been made by companies like Tesla, Google and Uber. But that doesn’t mean we’ll have autonomous cars on our roads by 2019. Legislative and ethical issues are likely to push out the timeframe – perhaps by many years.

Even though autonomous cars might get stuck in a legislative traffic jam, other technologies have an open road ahead of them. None more so than car sharing. This is when you borrow cars for short periods of time, often by the hour. That process is of course made much easier by using a smartphone app, similar to how you book an Uber driver.

Car sharing has in fact been available in Auckland since 2007, when Cityhop launched with its first three cars. The company was co-founded by former Auckland City Councillor Victoria Carter and the car rental firm JUCY Rentals. The idea is that you pay a monthly fee ($10 per month for an individual membership), plus an hourly and per kilometre rate each time you use one of Cityhop’s cars.

Cityhop currently has just over 2,500 customers, with 35 cars in Auckland and 4 cars in Wellington. I asked its Development Manager, Ben Carter, what are the reasons their customers cite for using car sharing. He told me there are three main selling points: “it’s cheaper than owning a car, it’s easier and more convenient than owning a car, and it’s environmentally friendly.”

Car sharing is already common overseas, for example in the US and Europe. According to Ben Carter, cost savings has been the most important selling point internationally. Recent research backs this up. RethinkX, an independent think tank, claims that car sharing will save the average family “more than $5,600 per year in transportation costs, equivalent to a wage raise of 10%.” However lot of that saving is predicated on car sharing companies using electric cars, which are much cheaper to run.

Mevo, a new Wellington startup, is going all-in on hybrid electric vehicles. Its fleet is made up of premium brand Audi A3 e-tron cars, a hybrid that Top Gear rated 7/10. The company plans to expand across New Zealand, but for now it has two “pods” in Wellington city. Given Mevo’s more upmarket approach with electric cars, it does cost a bit more than Cityhop. Mevo’s weekly membership starts at $19, with an accompanying hourly rate of $16.

I asked Erik Zydervelt, Mevo co-founder and CEO, who its early customers are. He said their service is popular with corporates (“usually the sales and operations teams”) and early adopter consumers. The individual users tend to be inner city residents – but not all of them Millennials, as you might expect. Zydervelt says there has been “a wide range of ages, from 25 through to 65 plus.” Running errands during the day is a typical use case and the average trip is a little under two hours. “Although there is a good show of longer trips in the weekends,” he added.

At this point some of you may be wondering, what’s the difference between car rental and car sharing? Mainly it’s convenience. Car sharing is self-service – you use the Internet to order a car, you can use the car for just an hour or two instead of booking it for a whole day, and you pick up and return the car without standing in lines or filling in paperwork. All that said, car rental companies have taken notice of this emerging market. The leading brand in the US, Zipcar, was acquired by Avis Budget Group in 2013. Enterprise and Hertz are also big players.

In New Zealand, despite the long-running Cityhop and the snazzy new startup Mevo, car sharing has yet to take off. The fact that Cityhop has only 2,500 users after a decade in business, suggests that New Zealanders aren’t keen to give up their car ownership lifestyle just yet.

So what would entice us to try car sharing, if cost savings hasn’t been a major factor to this point? Offering modern, environmentally friendly vehicles seems like a good way to get attention. As I’ve mentioned, this underpins Mevo’s strategy. As for Cityhop, Ben Carter told me that it offers hybrid electric vehicles as part of its fleet. This month it also added a single fully electric vehicle, a Nissan Leaf. It was given to Cityhop by power company Mercury and is available now to Auckland users (first in, first served!).

So electric cars are key to the short term viability of car sharing. But when does Elon Musk get a piece of the action with his autonomous cars? Well, longer term RethinkX thinks we’re heading for a future of “on-demand autonomous electric vehicles owned by fleets, not individuals.” In other words, car sharing using autonomous vehicles.

Is this just pie in the sky? Not at all, according to Mevo CEO Erik Zydervelt. “We will start seeing level 4 autonomous vehicles in fleets like Mevo around 2020, and it will only grow from there,” he told me. He likened it to how Netflix started out sending DVDs, then switched to streaming once the technology was mature. “Mevo and others are on much the same path with autonomous vehicles,” he said.

So prepare for a future of autonomous car sharing. But for the present, most of us in New Zealand – and especially we suburbanites – will continue owning a car. Although if you’re an inner city resident of Auckland or Wellington, perhaps an apartment dweller without a car park, it could be worth your while checking out car sharing now.