Flexible Car-Share Models Look Most Likely to Succeed

Mercedes-Benz Mobility and BMW’s announcement that they plan to sell their car-sharing joint venture Share Now to automaker Stellantis, the parent company of car-sharing business Free2move, offers Stellantis the opportunity to become the dominant player in the carsharing market.

It will add more than a dozen major European cities to the Free2move portfolio, as well as 10,000 additional vehicles to the company’s existing fleet of more than 2,500 vehicles. The company recently acquired Opel Rent to tap into the German and Austrian markets and has accelerated its car-sharing expansion in the US.

Free2move CEO Brigitte Courtehoux called the purchase of Share Now an “extraordinary acquisition” that would help the company reach its goal of hitting a global presence of 15 million active users by 2030. “We are already profitable,” she added. “We already have two million customers and this gives us an additional three million.”

Courtehoux explained concentrating on the customer experience portion of carsharing will be key to any long-term success, which means making it as easy as possible for users to access vehicles for whatever span of time they wish. “For example, our customers in the US, they first start to use our service using the minute model, but soon they begin using the vehicles for the entire weekend,” she said. “Thirty percent of our US-based customers are using both the minute and weekend plans.”

IoMob CEO and co-founder Boyd Cohen said Free2move would have a more autonomous mandate because it’s not directly tied to promoting a single branded vehicle. “One of the beauties of car-sharing from a user perspective is the variety and flexibility of accessing whatever vehicle you need at the moment,” he said. “It’s all about having variety, and Free2move has the benefit of being an autonomous unit that already has multiple OEM partners, which provide vehicles for their fleets.”

Cohen pointed out that, like most industries, getting to scale results in more economic efficiencies across cities and across the world. “While I’m a huge advocate for more decentralized and democratized access for startups and for smaller businesses, I think you’re going to see, a lot of benefits to economies of scale for a couple of these very large actors, which can behave more like a startup rather than an OEM,” he said.

Courtehoux agreed that for customers, having an adequate supply and diverse stock of vehicles is key. “We want the customer to always be able to find the right solution through our platform, and that is why we also provide parking places all over the world,” she said. “In Europe, we give our customers access to more than 250,000 electric vehicle charging stations, which means with one app, we provide the customer with a 360-degree approach to mobility.”

She pointed to the relatively young user base for the services, particularly for the minute-based sharing model (the average age of these years is 35) which suggests a growing population that wants personal mobility but eschews car ownership. “The younger generation, they are excited by this experience,” Courtehoux said. “They don’t even want to think about owning a car.”

Gartner analyst Pedro Pacheco said he’s not particularly surprised to see Mercedes and BMW bowing out of the ride-sharing business. “They went into these initial business models sort of as a trial. It was a little bit of an experimentation and car-sharing is the most difficult of the shared mobility models that automakers have tried,” he said. “It takes a very specific market with very specific conditions for car-sharing to be successful from a perspective of profitability and volume.”

With automakers like BMW and Mercedes at a crossroads and under a lot of pressure to remain competitive in obviously the areas of connected vehicles, autonomous technology, and especially electrification, a continued investment in something with little viability, at least for the short term, becomes a hindrance. “So, there’s a choice that needs to be made and that’s basically what has driven their decision to sell,” Pacheco said. The question for Stellantis is, what will they do differently?”

From his perspective, the successful car-sharing companies will be those that they will understand that at the end of the day, they need to focus on the customer. “The most important is the utilization rate of your fleet,” he said. “That means figuring out how much you can charge for each time unit, be it day, week, month, or year, and making it possible for the customer to quickly and easily choose any timeframe they want. This is all that matters.”

Free2move’s model, available in Europe and the US, lets customers take a car for a period of time ranging from minutes or a few hours. Customers who want to keep the vehicle longer, can do so without changing the contract, with Free2move adjusting the pricing automatically.

Cohen agreed with Pacheco, pointing to the additional flexibility Free2move would have to offer alternative models, because their fleet is larger and more diversified. “When you start to acquire hundreds or thousands of vehicles in a in a city, you have more flexibility to offer different types of packages and still have sufficient supply of vehicles for the range of needs people might have,” he said. “That’s another benefit of scale.”

Courtehoux said she’s looking forward to the day where her ultimate desire, the ability for customers to rent a vehicle without needing a driver’s license, will become a reality. “This is my dream since day one. I said to my team, ‘I would like to get rid of that’, but of course we are not able to do it yet legally,” she explained. “But if you look five years, 10 years from now, as soon as we have autonomous cars, the experience will be totally seamless because you won’t need a driver’s license. So, we are really looking forward to have those autonomous cars in the future.”