The Disrupters: WaiveCar Ruffles Auto Feathers With Free Rides

A mobility start-up in Santa Monica, California is bringing the ad-supported digital economy to life in the car sharing business, writes Robert Gray.

WaiveCar, which claims to be the world’s first all-electric and free car-sharing service is literally waiving fees for short journeys. “It’s like Zipcar but free,” explains Zoli Honig, co-founder and chief operating officer.

The model operates in a similar fashion to Zipcar. Customers sign up on an app and use it to find available cars in their area but, unlike other car sharing services, consumers can drive the cars free of charge for two hours and only then do they pay $5.99 an hour thereafter. The rental cost is primarily covered by a unique advertising model that includes car-top digital displays that essentially transform the vehicle into a rolling billboard. The company’s unique advertising partnership with Hyundai also transforms the car itself into an advert for the vehicle because it features the roof-mounted digital display and is wrapped with the carmaker and model names on the car itself.

Under terms of the strategic partnership Hyundai is providing IONIQ electric and hybrid vehicles as well as Tucson FCEVs for the nascent service, which currently serves the Los Angeles metro area and a pilot program featuring a few cars in Brooklyn. Honig says the overall fleet currently has 100 cars and he expects to have 200 by year’s end.

The idea was hatched by Honig’s friend, Isaac Deutsch, who serves as WaiveCar CEO. After convincing Honig to come aboard, the co-founders brought on Roy Ryman to run the fleet. Ryman was previously fleet manager for car2go. They started up the business with just 20 cars in Santa Monica in January 2016. In fact, the all-electric fleet sparked little interest, and perhaps, some enmity, from potential automaker partners in the early days.

“It was a frustrating experience,” Honig says of talks with General Motors. “Unfortunately (GM) thought we were too close of competition for Maven so we weren’t welcome partners and they wouldn’t finance cars for us, we had to do it individually.” So Honig and friends, family, and employees managed to secure a small fleet of Chevy Sparks for the launch.

The novel rooftop advertising, akin to the taxis in major metropolitan areas, was first used to announce the service itself. Honig recalls: “When we launched we would park cars in strategic locations so people would see it. Ads would show the message ‘You can drive this car for free, download the WaiveCar app.’ We quickly realized our biggest problem is getting more cars because they’re used at such a high rate.”

Swimming with sharks

An appearance on the popular TV show “Shark Tank” moved the company into higher gear. The show features entrepreneurs pitching their start-up concepts to a panel of high-profile venture capitalists who often take a stake in companies they are willing to bet will be winners. The start-up scored a $500,000 loan from investor Kevin O’Leary, which gave him a small stake in the company plus access to the advertising platform.

However, it has become a victim of its own success at this point, because there are more consumers who want to use the service than the company is comfortable signing up. Company officials wouldn’t confirm the exact number on the waiting list but it’s several thousand deep. Honig says: “We want to make sure we’re responsible so people don’t get into the service and there’s never a car available.”

The high demand for a relatively small fleet is a concern for Professor Jian Jiao, director of the Urban Information Lab at the University of Texas at Austin. He likes the company’s ideas and their model, after all, he says: “Everybody likes free stuff. It’s like any other new economy model – if you catch people’s eyes you can catch their money.”

Jiao says he has followed WaiveCar since that Shark Tank appearance and he thinks the car sharing company compares favorably with rivals and other modes of transportation. “If you look at the history of car2go they are not growing as expected. They have some headwinds from Uber and Lyft, private ownership of cars, and headwinds from general public transportation. On one hand, you can share a car but it’s going to involve some catches – you have to take some responsibility. WaiveCar is more popular because you don’t pay (for short duration trips). The less hassle you can provide the more popular you will become.”

However, Jiao says in order for the company to grow, it will need a new deal. “I think they have to figure out how to make their fleet larger and make it available to the larger general public. In order to operate on a large scale, they either have to sign a large-scale agreement with another OEM or have capital to purchase more cars.”

Hyundai partnership

For its part, Hyundai officials are upbeat about opportunities afforded by the partnership: “It’s a good opportunity to learn about the space and innovate,” Daniel Han, manager, advanced product strategy, Hyundai Motor America said in an interview.

He added: “It’s a new dynamic to car sharing, not just Zip Car or Maven, (WaiveCar) sells advertising on the vehicle with a wrap or digital board on the vehicle. They can put any kind of content on there through wireless technology. We’ve partnered with them and we have plans to deliver more cars to them in the future.”

Han also told TU-Automotive: “We’d call (the WaiveCar partnership) a success on many fronts: learning about the mobility as a service space, working with nimble start-ups, and getting people that aren’t current customers to try out cars in a unique and different way.”

In other words, instead of relying on advertising to get potential customers into the showroom to see and demo the cars, the companies are using the vehicles and the advertising adorning them for customers motivated to drive the cars for free. The feeling is, once they’ve driven the vehicles, consumers will give greater consideration to a Hyundai should they be looking to buy or lease.  Han said: “We’re thinking about different strategies for consumers to experience our vehicles, we’re trying to have a seamless experience for them to come to the dealer and buy a Hyundai.”

Honig asserts the start-up: “Creates the ultimate test-drive experience. There’s interesting marketing/branding experience. You may have dealerships spending tons of money to get people in their door but they’re actually banging down our door to use our vehicles. We ask (customers) to complete a survey on the Hyundai and that feedback is really important.”

Jiao thinks the Hyundai partnership is perfect since the South Korean automaker is a brand that’s clearly making inroads in the US market but is still making a name for itself. Still Jiao doesn’t see more established carmakers or a CEO such as Elon Musk signing on for this type of partnership any time soon: “The automaker has to be new and not have a large market share. There’s no way Tesla will partner and lease their car for free. It has to be a smaller automaker to be successful.” WaiveCar is also working with other partners including EVgo, which claims to be the largest public electric vehicle fast charging network in the US.

Santa Monica: mobility minded municipality 

WaiveCar’s hometown of Santa Monica, California is a hotbed for shared mobility. The controversial electric drop-and-go scooter company Bird is also based there. The city does not have an official relationship with WaiveCar but it does have a partnership with Zipcar that more than doubled the number of vehicles the car-share company has in the seaside city just west of Los Angeles. “We don’t have a direct relationship (with WaiveCar), though we are supportive of electric vehicle adoption over gas powered cars and car share as a component of a strong mobility program,” Constance Farrell, public information officer, city manager’s office for the City of Santa Monica told TU-Automotive.

She added: “Car-sharing is a key component of Santa Monica’s new model for mobility—one of our City Council’s top five strategic goals. Car sharing provides access to wheels when people want them. This is an important option among a menu of transportation alternatives that enables residents to use personal automobiles less often and ultimately own fewer vehicles.”

Looking down the road

Honig would not rule out an eventual IPO or even an acquisition or a merger at some point down the road but he maintained they are focusing on expanding in the US and potentially elsewhere. “You have to keep innovating and moving forward.” Jiao said expansion may lead to an acquisition, “WaiveCar will either become part of a large (mobility) platform or become a platform themselves, which is difficult for them to be on their own…I think either Uber or Lyft, or GM will be interested in purchasing them once WaiveCar has a larger market share.”

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