Mobility experts agree that more people will share vehicles in the future. But there’s a battle over who will provide these communal cars and how they’ll be shared.
One the one side are those who believe people will rent from a fleet of cars operated and maintained by one company. This vision is more a remodeling of the traditional car-rental paradigm, rejiggered to accommodate trips that happen over hours rather than days. Then there’s another faction, which imagines people will share their personal cars with strangers. To this group, the new side hustle is renting your car during the hours of the day or week when it normally sits idle. Finally, there is a tertiary group in this car-sharing battle: ride-hail companies like Uber and Lyft, which think the future of mobility resides in trip sharing.
But it’s the second group–the car-sharing faction–that’s gaining some attention among car manufacturers eager to make bets on the future of mobility before it’s actually taken shape. Today, the German automaker Daimler said it is co-leading a $92 million round of funding in Turo, a peer-to-peer car-sharing platform.
“We at Daimler believe the future of mobility will be shared, will be autonomous, electric, and connected,” says Jörg Lamparter, head of all Daimler Mobility Services. “We know this will happen and we have to prepare for that.”
Daimler already has a range of innovative services it’s investing in, including a fleet-style car-sharing club called Car2Go and a taxi hailing app called Mytaxi. It also launched its own peer-to-peer car rental service called Croove, which operates in Germany. Daimler is now selling Croove to Turo as a part of its recent deal. When I asked Lamparter why the company decided to offload Croove to a competitor, he said that Daimler didn’t want to compete with Turo; it would rather invest.
“It’s always a decision you have to make as a company when you launch something and you follow an idea,” he said. “What does it take to scale it?”
Money Follows Momentum
Car manufacturers are keen to put cash into transit startups that seem to be gaining speed. Turo says it has 4 million users and 160,000 cars on its platform. Already the company operates in the United States, Canada, and the U.K. The acquisition of Croove will give it a foothold in Germany. Another one of Turo’s investors, South Korean conglomerate SK Holdings, is poised to help the company expand into Asia.
Daimler isn’t the only car company dabbling in car-sharing projects. Last year, Toyota put money into Getaround, another platform where people can let their car like an apartment on Airbnb. Toyota is also working on embedding Getaround’s technology into its cars so they can be unlocked without a key by Getaround renters. While Daimler and Toyota see a future in world where people lend their cars to one another, General Motors thinks its managed fleets of cars, called Maven, is the better bet.
The logistics of renting a personal car may prove to be too much for most people. There are the small nuisances: Car renters can be late returning a car, for instance. But there’s also the possibility a renter could get into an accident. Turo says less than 1% of the cars on its platform suffer damage, and when crashes do happen, Turo touts a $1 million insurance coverage with no deductible. (In fact, among its three insurance options, one has a deductible).
And then there’s this: Turo pays up to the vehicle’s actual cash value—a figure determined by its insurance agency. That amount can be a point of contention for car owners expecting Turo to take on the full costs for their mangled car. In February, the owner of a totaled Audi R8 found that Turo’s insurer appraised the car at $12,000-$16,000 less than what he believed the car to be worth. Such a discrepancy may be standard fare when dealing with an insurance company, but consumers might not know that’s what they’re signing up for when they put their car on Turo.
The company is trying to fix some of these issues by working more closely with Liberty Mutual, both its sole insurer and an investor.
“We’re hoping to work with them to really get a fast-track understanding and deepening of our expertise in underwriting and risk management and insurance so we can provide better coverage and more economical coverage for our hosts and our guests over time,” says Turo CEO Andre Haddad. Long term, he’d like to develop car-sharing specific products, which could help give the industry more consumer protections and legitimacy.
There are other challenges for this car-sharing model. Turo could face opposition in new markets where consumer protections are king. In 2014, New York ejected Turo from the state for falsely advertising that owners would not be liable in the event that a person renting their car got into an accident. The state said owners can indeed be on the hook for an accident, even if they are not the driver, and their personal insurance can be impacted. It also penalized Turo for “unlicensed insurance activity.”
But that probably won’t stop consumers, anxious to make another buck, from joining the car-share economy.