Auto Sharing Boosts Green Industry

ZIPCAR, Inc., has just released a comprehensive study outlining the growing global auto sharing market. Zipcar, the world's largest car-sharing company appears to be gearing up to publicly sell shares IPO in 2010 as it fends off rivals such as Hertz Global Holdings Inc. (HTZ).

The potential market for car-sharing worldwide may amount to 37 million customers and yield $10 billion a year in revenue, Zipcar said, citing the June 2009 report “Global Auto Sharing”, it commissioned from the Economist Intelligence Unit.

ZIPCAR, Inc. has grown from a single lime-green VW Bug to a fleet of 6,500 autos, set to post a profit in the third quarter, Chief Executive Officer Scott Griffith said. Zipcar's success has prompted Hertz to announce its own sharing service with 1,000 vehicles in New York City by year's end, up from 100 in May 2009.

Several auto sharing studies support the total estimated members to Zipcar’s own historical data, the sizable economic and environmental benefits from car-sharing include:

Cost reduction: With an average savings (gas, insurance, depreciation, repairs etc.) of over $7,000 dollars per year compared to owning a car, there is potential to return $260 billion dollars back into local economies around the globe.

Congestion Reduction: With an average 40 percent reduction in Vehicle Miles Traveled "VMT", there is potential for 92 billion fewer miles traveled (annually). With an average of 60 percent of members avoiding purchasing or selling a vehicle, there’s potential to remove 22 million cars from dense urban areas, government fleets, and university campuses.

Emissions reduction: Fewer vehicles and reduced VMTs could prevent
40 Million tons of CO2 emissions (annually).

Whatever ZIPCARS’s plans on going public may be, the company is growing. The company has stated it believes its sales of $120 million in 2008, will rise to $1 billion within a decade. ZipCar’s investors include several venture capital firms, like Greylock Partners and Benchmark Capital.

The demand for initial public offerings from venture-backed companies has slowed after the recent financial meltdown. However, we have seen an increase in IPO offerings coming on the heels of companies such as OpenTable (OPEN) and SolarWinds (SWI).

For example, OpenTable Inc. the restaurant-reservation service based in San Francisco that went public in May 2009, was smaller and less profitable than ZipCar, according to regulatory disclosures. OpenTable commanded $20 a share, above its pre-IPO target range. The shares now hover around $27 per share Nasdaq.

ZIPCAR faces stiff competition from Hertz, the second-largest U.S. rental car company, hovers around $6 per share New York Stock Exchange. Hertz, a Park Ridge, New Jersey-based company has gained 40% this year 2009.

Hertz announced a car-sharing venture last year and in April acquired Paris-based Eileo SA to compete with Zipcar's reservation system.

Closely held Enterprise, based in St. Louis, is the largest rental car company. Enterprise started offering auto-sharing in 2007 including a partnership with Google Inc. (GOOG), owner of the world's most popular search engine. Enterprise continues its competitive moves in the auto sharing sector.

Zipcar also faces competition from local non-profit operators such as PhillyCarShare.org and Chicago-based I-GO. However, Zipcar has excellent customer loyalty many stating that have stated neither price nor competition could pry her away from a Zipcar.

Zipcar also announced the launched of a pilot program for plug-in hybrid vehicles "PHEV" in its Bay Area fleet through a partnership with the city of San Francisco. The company said it is looking for ways to increase the percentage of PHEVs in the fleet in 2009, but did not give any specific numbers.

At a press conference in San Francisco, Zipcar showcased a Toyota Motor Corp.’s Prius that has been converted for plug-in capability. The vehicle employed a Hymotion L5 Plug-In Conversion Module provided by A123 Systems, now partially owned by General Electric (GE).

The addition of the Hymotion battery provides the Prius with up to 40 – 80 miles of electrically assisted driving on a single charge. When the battery is depleted, the vehicle automatically reverts to standard hybrid operation, so driving range isn't a concern.

Additional competition comes from, Better Place's announcement that it too would bring an electric vehicle charging network to San Francisco. Better Place, the California start-up which has gained tremendous attention for its ongoing implementation to build electric vehicle charging networks in Israel, Denmark and Australia.

Shai Agassi, CEO of Better Place, on Monday told Wired’s first ever business conference Disruptive by Design that China is on the verge of green-lighting electric cars in a big way. And when that happens it will have tremendous influence over global automobile production worldwide.

China’s BYD (BYDDF.PK) is working on electric vehicles "EV" and a plug-in hybrid and has announced a deal with Volkswagen (VLKAY.PK) to develop batteries. And Hafei Automotive (exporting over 2.72 million engines annually) is helping to build the electric car that California EV startup Coda Automotive promises to have on the road in California.

Volkswagen is looking to Chinese battery manufacturer and automaker BYD for lithium ion batteries to power a plug-in hybrid or electric vehicle. The German automaker will integrate it with a supply of batteries it is getting from Sanyo (SANYY.PK) and Toshiba (TOSBF.PK). VW remains committed to diesels and is still experimenting with hydrogen, but it sees plug-in hybrids and EVs becoming a significant part of the lineup.

Further EV developments include, last weeks signed agreement between Coda Automotive and Connecticut-based Yardney Technical Products, Inc.; the joint venture "Coda Battery Systems LLC" will design, manufacture and sell automotive grade, lithium-ion battery power systems in the United States.

The development of hybrid vehicles, linked closely to the auto sharing market, has increased sigificantly in the U.S. by over 40% in a short time. This hybrid trend continues to shift the auto transportation industry towards cleaner, more efficient services and higher profit margins of the "auto sharing business models"; as more manufacturers introduce new hybrid and alternative fuel vehicles in the coming months and years.

Disclosure: The author has no significant financial holdings in the companies listed.

Comments

[33Nick:]

It will be interesting to see how this develops, especially in congested cities, where it makes most sense. We are hoping it will involve more pure electric cars in the short term future so that it drastically reduces pollution.

p.s., the notion of car sharing is an old one. The French author/singer Boris Viand thought of a similar strategy in Paris where people would leave cars open to anyone with a box to put money for fuel whenever needed. OK, so it isn't exactly ZipCar's business plan but outrageous ideas eventually come about.

The Electricnick.com team.

Jun 18 12:24 PM

[jdgee:]

Hmm... I can really see Steve and Jimmy sharing the same vehicle, which examples my less than favorable opinion of Auto Sharing.

Best Wishes

Jun 19 06:14 AM

[jerrydd:]

I gave up renting cars as too expensive and Zipcars is not much better. Maybe for people who rarely need cars in costly cities it might be good.

I'm instead driving my EV trike MC which I put together extremely cheaply does most of what I need and soon my 2 seat 100 mile range EV sportswagon with a very small battery charging generator for unlimited range will cover all my needs. My costs are very low, under $.03/mile fore battery, fuel costs.

The MC can be produced for under $5k and the sportswagon can be for under $12k both using lead batteries.

Light and aero are the key to cost effective EV's as EVdrives, batteries needs are priced by the weight, aero of the vehicle. Nothing you can do will change that.

The coming Li batts already are under sealed lead battery costs and will triple my range for another $3k production cost.

There are way too many Li battery manufacturers now and way too little market for the next 4 yrs so expect many to die. BYD is about the only pure play that will survive. Many other like A123 probably will too but at least 75% won't so beware.

Nissan, Mitsubitsi, Toyota are probably going to be the auto companies who will do best on EV's as they have experience, battery sources and small vehicle experience that is necessary to ramp up quickly viable low cost EV's. Ford is the best US one. GM is just not being EV smart with the expensive Volt.

Jun 20 11:42 AM