Automakers Break Into Ride-Sharing Car Market

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Ride-sharing first became a tech-phenomenon in 2011 when tech-giants, Uber and Lyft, introduced the ability to hail cabs and share rides with friends instantly, through an app available on smart phones. Since then, according to Business Insider, 30% of the U.S. population has reported using some form of a ride-sharing app. Ride-sharing has made transportation fast and convenient, and the industry is only growing as new companies look to break into the market.

However, as Popular Mechanics explains, the sharing trend, as opposed to individuals purchasing and operating their own vehicles, started with car-sharing. Car-sharing became a trend in the automotive industry in 2000 and was popularized by a company called ZipCar, but has just recently taken off since the development of smart phones. Car-sharing allows customers to purchase a membership with a car-sharing service such as ZipCar, which customers can then use along with the company’s website or app, to locate the nearest vehicle, flash their membership card to unlock the vehicle, and then drive the car their reserved time period. While car sharing is very convenient for those who don't own a motor vehicle, it's most common complaint is that most car-sharing companies' customers are given the option to be charged by the day, hour, minute, or mile they drive. Being charged by the minute or mile can get very expensive. However, the positive aspect to car-sharing is that gas and insurance are already included in the fee.

While it was the first to gain popularity, ZipCar is now one of many similar services. Last year, The Michigan Law Firm Blog wrote an article about GM launching its own car-sharing service, Maven. In an effort to become the leading forerunner in personal mobility services, GM acquired assets from Sidecar, a ride-sharing start-up company, in January of 2016 and has also teamed up with the premier ride-sharing brand, Lyft. GM has also broken into the ride-sharing market by introducing Maven Gig, a service that allows drivers for Uber, Lyft, and other ride-sharing services to rent Chevy Volts, if they do not have a car of their own, to drive their ride-share costumers in. 

More recently, Daimler and BMW have become the next large automakers attempting to challenge Silicon Valley by designing their own car-sharing and ride-sharing programs. According the The New York Times, Daimler, the makers of the luxury brand, Mercedes-Benz, first introduced its car-sharing brand, Car2Go, in 2008 in Germany, and has since grown to serve about 2.4 million members across 9 countries. 33% of Car2Go members are even located in North America. The Car2Go program has yielded positive results after a 3-year study of 10,000 members done by U.C. Berkeley’s Transportation Sustainability Research Center, which reported that Car2Go service has reduced vehicle ownership and miles traveled in privately owned cars. As a result, greenhouse emissions have been reduced, 2% to 5% of Car2Go members have sold their privately owned vehicles, and 7% to 10% of members have stopped seeking to purchase a vehicle because of the service.

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BMW first launched its own car-sharing service, DriveNow, in Europe in 2011. In December of 2016, it went on to launch its North American car-sharing service, ReachNow. BMW has also been testing its own ride-sharing service in Seattle as well. Steve Banfield, the CEO of ReachNow, explained the company’s reasoning to enter into both car-sharing and ride-sharing markets by stating that “sometimes they (customers) want to be driven, sometimes they want to drive. Sometimes they want the car for several days, sometimes they want the car for 10 minutes.” Banfield further explained that offering customers different ways to move about cities allows the company to study and research the method of transportation individuals prefer to use, allowing the company to become closer to the consumer. Both services also allow BMW to promote their luxury brand by offering temporary rides and mobility to individuals. 

A future with autonomous vehicles is inevitable, so it is important for companies to mold a business strategy that will allow themselves to adapt to a new automotive industry that will no longer require individuals to purchase and operate their own vehicles. BMW has reportedly partnered with Intel to begin production of autonomous cars by 2021, while Daimler and Uber have partnered to start their own creation of self-operating vehicles. These large automakers hope by creating their own personal mobility brands and creating early plans to start autonomous vehicle production, they will be able dominate the market in the future.

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With these car-sharing and ride-sharing programs, it is important to remember that human drivers are still operating these vehicles (that is, until vehicles become autonomous). Therefore the risk of a car accident due to human error is always present. Thus, passengers should always stay alert while riding in a vehicle and follow car safety precautions such as wearing a seat belt.


The Michigan Law Firm, PLLC is a Metro Detroit law firm that handles all types of accident cases. If you or someone you know has been involved in car, bus, motorcycle, or truck accident, call the The Michigan Law Firm, PLLC at 844.4MI.FIRM for a free legal consultation.