Car-Sharing Sounds Crazy, but It Just Might Work

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July 23 2012 6:15 AM

Baby You Can Drive My Car

Six million people just got easy access to car-sharing. Are you one of them?

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Chevrolet Volt owners and other subscribers to GM's OnStar can now rent their cars out with ease

Photo by Scott Olson/Getty Images.

Car-sharing is a utopian idea. Several companies are trying to build ways for people to rent out their vehicles to others for an hourly fee, and they all say they’re doing it for the best reasons—to let people make extra money from an expensive possession they’re not using much, to save the world’s resources, to bring neighbors together in mutually beneficial transactions. Peer-to-peer car-sharing also assumes the best of us. Only in a world in which people are fundamentally good—in which I can be pretty sure that you won’t trash my ride just because it’s not yours—would this scheme work. Finally, these businesses imagine that the government and insurance companies will be forward-thinking enough to go along with the plan, too.

I would love to live in that world—a world where sharing your car is as hassle-free as selling a knick-knack on eBay, and you could consider renting your neighbor’s barely used convertible for a fun weekend getaway. But I’ve been worried that our world isn’t ready to share. In March, when I wrote enthusiastically about RelayRides, a startup that had just launched a nationwide car-sharing service, most readers pooh-poohed the idea. Lots of people said they’d never be comfortable lending their cars to strangers—they’d all taken liberties with rental cars, so they assumed that strangers would mistreat their vehicles, too. The idea is also plagued by ongoing legal and regulatory uncertainties, and, until recently, the process of the technology to manage handing over the car from owner to renter was too cumbersome.

Recently though, I got to try out a new RelayRides feature that convinced me that sharing might one day really, truly work. RelayRides has integrated its service into General Motors’ OnStar roadside assistance service. This means that any of the 6 million OnStar subscribers across the country can now make their vehicles sharable on RelayRides. The new feature also makes it easy for people to rent a car. In the past, you’d often have to get the keys from the owner, but with OnStar—which connects the car to a central dispatch service by satellite—you can unlock the car with your phone.

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I tested the service with a Chevy Volt that RelayRides had parked for me at a train station near my house. After spotting the Volt, I pulled up RelayRides’ site on my phone, and pressed a button to check in to the rental. After about 20 seconds, the Volt’s door lock door popped up. I got inside, popped open the glovebox to find the key, and I started ’er up and sped away. After circling the block, I parked the car near where I’d found it, put the key back in the glovebox, and got out. On my phone, I checked the car back in to RelayRides. The doors locked, and I walked away.

The transaction worked flawlessly—it was just as easy to use as a traditional car-sharing service like Zipcar. But unlike Zipcars—which are economically feasible only in dense cities—OnStar vehicles are everywhere. Suddenly, all around you, even in the suburbs, there are cars for you to borrow.

RelayRides’ OnStar partnership solves what has been the biggest impediment to car sharing: While companies had created great online marketplaces for owners and renters to find one another, they’d had a harder time coming up with a way to manage the vehicle hand-off from one party to the other. Both RelayRides and Getaround built electronic access kits for owners to install in their cars, but that’s not something many people are willing to do. The programs continue to allow people to exchange keys, but that’s a hassle if you want to rent your car to someone when you’re not around. Some owners keep their keys in a lockbox, but that could be unsafe. The beauty of OnStar is that it comes with built-in theft detection: If someone who’s not authorized to rent your car somehow gets the key and drives away, OnStar can track your car and even block its ignition or slow it down.

Now, OnStar doesn’t solve all of the problems surrounding peer car-sharing. First, there’s insurance. RelayRides covers rentals with a $1 million dollar policy; if someone has an accident in your car, you, the owner, generally wouldn’t have to pay anything, and the renter will likely only have to pay the policy’s $500 deductible. Getaround, a competing car-sharing service, offers a similar plan. But as the New York Times’ Ron Lieber pointed out, these policies still leave some loose ends. In the extremely rare case of an accident that causes more than $1 million in damage, the owner might have to pay the additional expense. What’s more, it’s possible that some insurance companies will look askance at sharing—if you’re renting your car to strangers, they may conclude that you’re operating as a car-rental company, grounds for dropping your coverage.

The good news is that some states have moved to fix this problem. In California, a law that went into effect in 2011 prohibits insurance companies from dropping owners’ coverage over car-sharing. It does so by clearly defining what constitutes a car-rental business—you’re not considered a rental company if you’re participating in an established vehicle sharing program (like RelayRides or Getaround) and as long as you’re not making a net profit from your vehicle. (When you offer up your car through these services, you choose your hourly rental rate; as long as you make less than what you paid for your car and the amount you pay for maintenance, you’re kosher under the law.) Washington and Oregon have passed similar laws.

But the bad news is that in most other states, the laws are essentially silent on peer car-sharing. A RelayRides representative told me that the company believes that no such laws are necessary—that other insurance regulations prevent firms from dropping your coverage for participating in car-sharing. The firm has been operating in Massachusetts—which lacks such legislation—for two years and hasn’t faced any problems there. Still, the insurance industry isn’t known to embrace innovation. If I were renting out my car in one of the 47 states that has not passed legislation legalizing peer car-sharing, I’d be a tiny bit worried about my insurer coming after me.

I suspect that over the next few years, many states will legalize car-sharing, especially if tech improvements like RelayRides’ OnStar plan make the practice more popular. I also think that as sharing becomes more widespread, we’ll all get more comfortable with it. You won’t abuse my car the way you abuse a rental car because you’re connected to me online—I’m not a faceless corporation, so you’ll treat my car with respect. Meanwhile I won’t expect the worst from you; I’ll rent you my car because, from what I can tell of your profile, you seem like an upstanding citizen.

I know this sounds hopelessly naive. But so do a lot of big things in tech—eBay, Craigslist, online dating. Who knows when, but someday, car-sharing won’t be a pipe dream.

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