Just a few months ago, Seattle was pioneering free-floating car-sharing in the U.S. as the preferred test market for these new automotive mobility services. But the news Thursday that Lime will cancel its LimePod service, just two months after BMW shuttered its own ReachNow service, casts a new cloud of uncertainty over this form of urban transportation.
New mobility is a fast-moving industry in which innovations can take over cities only to go belly-up a few months later. It’s a phenomenon that has already played out in Seattle and abroad. Experts don’t believe these experiments are over, but what has happened in Seattle illustrates how difficult it is to operate this type of service economically — despite its popularity with customers.
And then there was one
Based in San Francisco, Lime is best known for its free-floating, rentable bikes and scooters. Seattle was the only market where Lime experimented with car-sharing. LimePod launched in November 2018 under a Seattle Department of Transportation pilot scheduled to end Dec. 31, 2019. Lime announced Thursday that it will not seek to renew the pilot or establish a long-term car-sharing program. LimePods will start disappearing from Seattle streets next month and will be completely gone by the end of the year.
As reported earlier by GeekWire, Lime blamed the shutdown on its inability to find a partner to deploy an electric fleet. The company would not comment on whether the service was profitable or its underlying economics. LimePod was popular and growing to the end, according to the company.
Last month, Lime Director of Strategic Development Jonathan Hopkins said, “we’re extraordinarily happy with our product” when GeekWire asked about how LimePod was faring.
“LimePod has grown rapidly in the amount of ridership that it has,” he said. “We view its performance as really solid.”
At $1 to unlock and $0.40 per minute to use — with gas and insurance included — LimePods were often a cheaper option than hailing a Uber or Lyft ride.
The decision caught many Seattleites off-guard. Customers lamented LimePod’s demise on Twitter following the announcement.
I’m sad. I liked these little cars. They are much easier to park and 4 ppl fit 🙁
— The REAL No Spandex Required (@NoSpandexReq) September 19, 2019
The story had an air of déjà vu. Two months earlier, ReachNow abruptly shut down in Seattle and Portland. ReachNow briefly operated its car-sharing service in Brooklyn, NY, as well, but ceased operations there in 2018. The service was popular with many customers, who said they were sad to see it go.
“We got great reviews,” former ReachNow CEO Steve Banfield said at the time. Banfield left ReachNow a few months before the service shut down. “We got very positive word of mouth. People were very big fans of the service.”
Between ReachNow and LimePod, there were 1,250 cars floating around Seattle that travelers could pick up using an app and drop off at their destinations. By the end of the year, all of those cars will be gone, leaving just one car-sharing service in Seattle.
Car2go was Seattle’s first free-floating car-sharing provider — and it’s the last one standing. The service will continue to operate in Seattle for the foreseeable future.
ReachNow and car2go are experiments of two large European automakers. BMW owned ReachNow and Daimler owns car2go. The two companies fused their various new mobility companies together to create a joint venture this year. ReachNow was eventually shuttered as part of the corporate reshuffling.
Car2go’s Kendell Kelton said Seattle customers “can continue to use our service with confidence.”
Seattle: The new mobility lab
Seattle’s shrinking car-sharing market is one example of a dramatic shift in urban transportation over the past few years.
For decades, there were three main modes of transportation urbanites relied on to get around: personal cars and bikes, walking, and public transit. Though not always reliable, city dwellers could trust that public transit would be there, thanks to ongoing funding by taxpayers.
Then the private sector got involved. Uber and Lyft arrived on the scene about a decade ago, followed by car-sharing, free-floating bike-share, and now, scooters. New mobility services provided more transportation options than ever before. There was only one problem. Commuters got hooked on services whose business models were largely untested.
Seattle quickly emerged as a magnet for transportation companies eager to test new ideas. High tech workers were pouring into the city at a breakneck pace, with spending power and a reputation for adopting new technologies quickly.
“We have a very tech-savvy workforce because people are coming here to work at our leading companies and that means that those people are predisposed to want to try new things, especially new technology services,” Banfield said.
Car2go launched in 2012, followed by ReachNow in 2016. Then came the bikes. Seattle was the first U.S. city to fully embrace dockless bike-sharing, permitting three companies to deploy bicycles as part of a 2017 pilot. The effect was dramatic as Lime, Spin, and Ofo rolled out hundreds of candy-colored bikes in Seattle, introducing a new mode of transportation and plenty of consternation as sidewalks suddenly got a lot more crowded.
But it was short-lived. Only one of the original three dockless bike-share operators was left standing a year later after Spin pivoted to scooters and Ofo shut down all U.S. operations.
Car-sharing followed the same arc. Mobility companies came up with a new idea, selected Seattle as the lab, crowded the market, and then there was a culling, leaving the city’s residents without services they’d come to rely upon.
“That we haven’t been able to scale multiple of these different services and we’re still figuring out how private services can combine with public transportation and deal with all the traffic and construction and the infrastructure impact of all this growth, that’s clearly something that the city should look at,” Banfield said. “What can it be doing to support and grow these businesses better and ensure that they’re going to be successful in the long-term because they will help to make the city better.”
But dockless bike-share did bounce back. Lime soldiered on and a few months later, Uber launched its Jump bike-sharing service in Seattle. Lyft intends to roll out its bike-share offering too. Could car-sharing rebound in the same way?
The European model
Although car-sharing is a tricky, capital-intensive business, experts say it can be done right. Car-sharing has taken off in Europe, which represents 50 percent of the global car-sharing market, according to a study by Deloitte. The European car-sharing market is expected to grow to 15 million users by 2020.
“It has grown and been very successful in several cities around Europe,” Banfield said. “The difference is you have different levels of car ownership there, you have more access to mass transit, and you have, generally, cities that are much more dense. You have more people per square mile or per area. That means you literally have more customers that are in walking distance of your car. Part of the challenge in the U.S. is just our cities, regardless of population, are much more spread out.”
The Deloitte study found that for car-sharing to be successful, it must be offered in a region with high population density and cooperation from local authorities. It also must be affordable and convenient, with cars that are within walking distance of customers at all times.
Solving for convenience is one of the biggest challenges for ride-sharing companies. Riders will only utilize a car-sharing service if they think it will be more convenient than other modes of transportation. Vehicles must be within walking distance of a rider, which poses a challenge. It’s much harder to move cars around a city than bikes or scooters. The rider also needs to have confidence they’ll find a place to park the car when they arrive at their destination.
Vendors also have to cover the cost of the cars themselves, including fueling, maintenance, and insurance.
Sandra Phillips, a car-sharing vet who started the new mobility consultancy firm Movmi, called it “a supply and demand game.”
“You have to make sure that you have your vehicles where there is demand,” she said. “I always say free-floating is a little bit like herding cats because you have a finite number of vehicles … ebb and flow is not automatic and it doesn’t work as easily as people think it does.”
Despite those challenges, Phillips believes the car-sharing industry has a future. She expects large players like Daimler and BMW to continue to dominate because they can absorb the high costs of operating the services.
“I don’t think this is the end of free-floating car-sharing,” she said. But she noted, “it’s a hard business model to run successfully and it needs large upfront investments.
Hear a discussion of this story in the second segment of this week’s GeekWire Podcast. Listen below or subscribe to GeekWire in your favorite podcast app.