Robin Chase is co-founder and former CEO of Zipcar, the world’s largest car club with more than 10,000 cars in the US, Canada and Europe. She now runs Buzzcar, a peer-to-peer car sharing service.
Olivia Boyd (OB): Did environmental concerns motivate you to develop Zipcar and Buzzcar?
Robin Chase (RC): Yes there was a social and environmental benefit. But for me personally that was not the primary reason. It was a service I wanted to have and I could see there was a business model. I would say that Zipcar made renting a car as easy and convenient as owning your own car. In people’s minds, renting a car was an arduous annoying long process, so you would never do it for just an hour or two. Now a bunch of people have realised that it’s cheaper to be a member of a car club than it is to own your own car.
OB: What does car clubbing offer the environment?
RC: A well-used shared car is used by anywhere between 30 and 60 people. And 40% of those people have said that they were able to avoid buying a car, or sold a car, because of it. That means that each one of these well-used shared cars is replacing 15 personal cars. What’s interesting about those 15 cars is that every time you put a car into a city, you have to have three parking spaces associated with it. So when you take out the one car, there are three parking spaces that don’t need to be created.
Each Zipcar is making 30-60 people car satisfied with one car. And the most important attribute is that when people pay by the hour for cars, they turn out to drive about 80% less. That’s because when you drive your own car, you’re only thinking of the price of fuel, and sometimes parking. But when you rent by the hour and the day, in real time, right in front of your face, you’re having to say is this trip worth $10, $20, $100? And 80% of the time, no it’s not worth that.
So the most important thing for me that car sharing and car clubs do is make you rationalise your car use within your transportation options. When I own my own car and I want ice cream, I jump in the car and go buy ice cream. When I don’t own my own car and I want ice cream, I think wow that will be $10 an hour to go buy it, I’m going to get it on my way home from work. It forces you to choose rationally between whether you should walk, take the subway, bike, take a taxi, or bundle all your trips together.
OB: Might car clubs simply hook more people into a car-centric lifestyle?
RC: Very deep research shows that it does the exact opposite. It doesn’t induce more driving. The average urban dweller drives around 7,500 miles a year. But when we put 50-60 people on that car it’s only going 16,000 miles. Another interesting side effect is that once you start driving less, driving becomes annoying. It’s very high stress and it’s scary when you go fast. Once you stop using a car, it’s a higher hurdle for you to go choose a car for that errand rather than all your other choices.
More people are living in dense urban areas. The future is urban, the future is primarily dense urban and there’s no way in hell we can move and store cars the way we do today. New York City is the US’s densest city. Right now in New York, only 40% of households own a car. Then look at the density of Asian cities. What does the future hold? The future holds dramatically fewer than 40% of households owning cars.
I think we will have motorised transport and that motorised transport will always be shared because that minimises the storage issue, and those cars will be filled to capacity. You will get a very tiny car, or a motorcycle or an electric bike to move your own body and when you need to move four people, you’ll be four people in a car. But the idea of one person driving in a big car is not part of the future. Right now in the US, something like 92% of trips are done by car. The future will be the reverse.
OB: But a lot of cities are still being constructed with the car in mind.
RC: I think that is the nightmare of our times, that there’s a lag between people’s understanding of what the future demands and what people want. In the US, there’s a lot of recent studies that we’ve passed peak car and peak miles travelled.
I think in China it’s a horrible nightmare that they’re building cities with this expectation and those cities will fail and be miserable like many cities in the world. In Shanghai, I was contemplating the huge number of very high-rise residential buildings that had gone up but were not yet populated and are built with parking underneath. And I was struck by the fact that when they are fully populated, when those households come in with their cars, Shanghai will come to a complete standstill. I was just in Mumbai and it was the exact same thing happening but on a more cataclysmic scale.
OB: What should governments do? Subsidise car sharing schemes?
RC: I think key in all of these cities is to make sure that the price of parking reflects the cost of real estate. In Boston, you can get a residential parking permit and park for free for a year. Yet to buy a monthly parking pass in a private parking garage is US$300. One open air parking space in a very fancy part of Boston sold for US$225,000. And the city government is giving that away for free day in day out. So when we talk about subsidies for transport, I think let’s just remove every subsidy associated with cars. That’s a logic that feels more powerful to me.
Enrique Peñalosa, who used to be mayor of Bogotá, has beautiful language which I think applies to China precisely – for Bogotá he was saying “only 3% of my population owns cars. Why am I spending 95% of my transportation infrastructure for those 3% of people?” I feel China can be making that compelling argument. Enrique built out amazing bike paths, amazing pedestrian ways, fabulous transit, because he said this reflects my population’s needs.
And once you get parking that’s expensive and make streets that provide the right balance between humans and cars then driving is even more annoying and expensive.
OB: What else would you recommend to Chinese policymakers?
RC: My biggest piece of advice around ride sharing – that’s the peer to peer sharing – is to make it legal. We need to make it legal for personal car owners to be able to accept money on their cars, to give someone a ride or to rent someone their car. In my mind, the future is clearly going to be comprised of these kinds of peer-created companies and it’s a very solid and good future. It really dramatically minimises the investment required to get these things to work and it makes more people satisfied on fewer cars. We know that cars in the US and Europe are used 5% of the time and sit unused for 95% of the time. It’s the second most expensive asset people ever buy and yet they’re letting it sit around for 95% of the time.
That said, in transportation, there’s this new thing looming and that’s the autonomous car that Google is producing and it’s coming out really, really fast. I think that’s actually going to be a huge game changer if we do it the right way. We can share the car and we can share the trips and we can get to about 10% of the number of cars we have today.
OB: What does that mean for your business model?
RC: Like any company you have to stay on the edge and evolve to meet your customers’ needs and pay attention to how those needs are changing. The companies that don’t, in general have really hard crashes. One of the things that’s fascinating to me about the auto industry is that it has been very propped up by government support world around. And they’ve been very adamant about not changing all sorts of things. I think when you’re very rigid it sets you up for a very precipitous plunge.
I know that the big car companies – Ford in particular – are trying really hard to figure out how to turn themselves into a mobility company and not a car company. But it’s very challenging for legacy companies because they have tens of thousands of employees and factories doing something we don’t want anymore. It’s hard to transition those individual employees into a new way of doing things. It’s definitely a hard path for them and I am not eager to be in their shoes.
Avis just bought Zipcar and I have every expectation that they will think of it 100% as a car company, and they will miss that transition. They could have thought of themselves as a sharing economy company, as a connected vehicles company. They could have gone many other paths, but that’s not what they saw.