Following Setbacks for Car2Go, What's the Future of Carsharing?

Car2Go has pulled out of several cities recently, making even carsharing's most ardent believers wonder if the business model is built to last.
November 26, 2016, 5am PST | James Brasuell | @CasualBrasuell
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Richard Eriksson

David Levinson follows up on the news that Car2Go is departing the Twin Cities by revisiting a post from 2013 in which he wrote that carsharing is the mode of the future. In that post, Levinson "basically made the claim that this is a network-effects driven business, for this to work, the access costs must be low, generating demand, which will increase vehicle availability (as suppliers respond to demand), which will lower access costs, which will increase demand."

In Minneapolis, however, the Car2Go fleet spent as much time idle as private cars, according to reports. In the case of Minneapolis, Levinson believes "[that] access costs were insufficiently low to get this positive feedback network effect going here. Perhaps a greater investment would have juiced the market, I am not sure. Gas prices are exceptionally low, the economy is at the peak of expansion, so people readily buy and drive private cars." 

The fact that Car2Go has pulled out of other cities (though it's growing in some) might mean that the carsharing model is having trouble fitting in with the current market of mobility options, and it's unclear whether Levinson's prediction about the durability of carsharing will prove prescient.

Hat tip to Angie Schmitt for sharing the Levinson article

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Published on Wednesday, November 23, 2016 in Transportist
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