I Have Seen the Future of Local Transportation

As regular readers know, my family gave up our car about a year-and-a-half ago. Our lease ended, we turned in the car, and we didn’t get another one. The idea was to go one month without a car and see if we could get around with biking, walking, public transportation, Lyft, and the occasional rental.

Overall the experiment has been a success. I’ve written about the experience at length in the followings posts:

One Weird Trick To Get Skinny, Rich, Tan, and Live Forever (No Car Experiment)

No Car Update (Month 2)

No Car Month 3 – The Honeymoon Is Over

Carless in California (Month 4)

No-Car Experiment (Month 8)

No Car Update: Month 16

I’d summarize the pros and cons of not owning (or leasing) a car as follows:

PROS

• Save about $150/month
• Don’t have to deal with hassles of car ownership
• Walk and bike more, fitter (including kid)
• Lighter environmental footprint

CONS

• Some things are more of a hassle (like getting to the beach, or hiking trails in Oakland parks)
• Our parents end up driving more, doing more dropping off and picking up their grandkid (con for them, in any case)
• Though most Lyft drivers are really nice, there are some issues

A New Car On The Block

A few months ago we started noticing a bunch of black Prius c’s parked around our neighborhood, all with the same blue trim and bike racks. All little research revealed they were part of the Gig Car Share fleet, an East Bay car share program developed by AAA. Kia was the first to try the new car share service and reported that the sign up was easy and the cars fun to drive. I signed up soon after and immediately became a fan. Here’s how the service works:

1. Download the app (iOS or Android) and sign up by taking picture of your driver’s license and credit card (no signup fee).
2. Use the app to locate the nearest Gig cars in your neighborhood.
3. Reserve the car you want for up to 30 minutes (no charge).
4. Find the car and unlock it with your phone or your Gig card (which you’ll get in the mail a couple weeks after joining).
5. Drive it to wherever you want.
6. If you’re in the “home zone” (north and downtown Oakland, most of Berkeley, and a few other spots like the Oakland Airport), you can just get out of the car and end your ride right there. That’s right, one way trips are possible. You can even park in a 2+ hour metered space and not pay–Gig has a deal with both cities to work that out.

Pricing is reasonable: $2.50 per mile, $15 per hour, or $85 per day, depending on what rate is the cheapest (AAA members get a 10% discount). For many uses, it’s cheaper than Lyft. The other day I drove to Trader Joe’s in a Gig, parked and ended my ride, went shopping, and took the same car home as a separate ride. $6 total. Last week I drove to a location near the Oakland airport and took a colleague out for lunch, then drove home, all as one ride. That one cost about $25. So far in July I’ve spent about $45 on Gig, none on Lyft. I think Kia has spent about twice that. I’m guessing we’ll spend about $250 on Gig in July, and very little on Lyft, which will put us slightly below our average monthly expenditure for car services (or maybe a bit higher, since we’ll probably rent a car later in the month as well). Still, well below our estimated $450/mo. if we were leasing or paying off an economy car, paying for gas/insurance/fees/tolls/parking/service, etc.

Too soon to say if frequent Gig use will be cheaper than frequent Lyft use, but I vastly prefer it. I enjoy driving as long as I’m not stuck in traffic, I can always find a Gig near my house (which is pretty much dead center of the Gig “home zone”), and the Prius c is a fun car to drive as long as you’re not trying to race anybody (not my style). The best thing is, I can end my ride in front of my house. Of course, the car is usually “stolen” by the next day (the service is popular in our neighborhood), but I can walk a few blocks and find a new one pretty easily.

Is This The Future of Driving?

I would love to say yes. It’s so frikking convenient. Not owning a car has never been easier.

But, is it viable? Will the program make any money?

For now, it may not matter. AAA wanted a foothold in the car share space, and luckily they chose my neighborhood to roll out their pilot program.

But let’s run some imaginary numbers anyway.

According to this article, the fleet size is 250 cars. The Prius c costs about $20K, maybe $25k after you customize with bike racks, custom trim, cellular reception, special sensors, etc. So that’s $6.25M for the cars. Maybe another million on a web site, a few billboards, and other promotion. And another million in planning and startup operations. Round up to $10M startup costs.

How many employees? No idea. Maybe 50, including people to answer the phones and service the cars? At $50K each per year that comes to $2.5M per year. Maybe the same amount for other annual operations costs? So that’s $5M per year. Amortize the startup costs over five years (since you’ll probably need a new fleet by then) and that comes to $7M per year.

And how much money is the program bringing in? Let’s say we’re the average family user, and we spend $250 month. How many families are using the 250 car fleet? Maybe 1500? The cars move around a lot, so that seems reasonable. So maybe Gig brings in $375K a month, or $4.5M per year.

So, yeah, Gig is probably losing at least $2M per year. But, if I’m way off on the number of employees needed to keep the program running–say it’s more like twenty-five–then they could easily be breaking even. If they expand the program, economies of scale could make the program profitable (according to my wild made-up estimates).

The thing is, Lyft and Uber are losing money too. Who can keep the burn going the longest? I’m hoping AAA’s vast preexisting infrastructure easily absorbs the costs of running Gig as a rounding error, and they keep it around forever. And expand it.

It’s also possible I considerably overestimated Gig startup costs. They might have gotten a substantial discount for buying 250 Prius c’s at once, and there might be other savings related to AAA’s well-established national infrastructure.

Other Car Share Models

There are other competitors in the car sharing space, like Getaround, a peer-to-peer service. If I owned a car, I could rent it out on Getaround at the hourly rate of my choosing.

But that involves dealing with people I don’t know, and possible cancellations, and people’s individual preferences around their cars, and all sorts of hassles. So no thanks. I was bummed when Getaround absorbed the CityCarShare service.

ZipCar is still going strong, but I prefer Gig. Did I mention you can leave the car anywhere in the HomeZone? Which, conveniently for me, includes 90% of my regular destinations.

How to put this exactly? The Gig car share model is so good, it feels like I own 250 cars. There’s almost always one around when I need it (and if not, I can always call a Lyft or use public transportation).

For medium-density urban areas, I could really see the Gig model taking off. I hope it does. Car sharing means easier parking, fewer cars driving around looking for parking, less traffic, less pollution, smaller fleet sizes, and none of the hassles of car ownership.