City Hall

BMW DriveNow CEO Says New Carsharing Legislation Would Likely Bring Company to Seattle

Car2Go likely to face new competitor.

By Josh Feit December 12, 2014

Rich Steinberg, the CEO of BMW DriveNow, one of the car sharing companies rumored to be jumping into the Seattle market when the city expands car sharing, told me today: "Assuming [the legislation] all comes together, then we'll start figuring out how to get entry into the Seattle marketplace."

Request legislation from mayor Ed Murray would increase the number of free-floating parking permits from 500—all currently assigned to Car2go—to 2,000 permits. The legislation would allow up to four companies to compete in the market, allowing them 500 permits each. Also under the new proposal, the city will actually make 750 permits available to any company whose service area covers the whole city: From Northeast 145th Street to the north to Rainier Beach to the south. Car2go only goes to Northeast 125th Street to the north and South Orcas Street in Hillman City to the south.)

"Free-floating" parking permits let drivers park the cars for free in legal parking spots all over the city, allowing members to use their phone apps, jump into a nearby car-sharing car, and make a one-way trip—dropping the car off in another neighborhood.

BMW DriveNow is similar to Car2go, though they've got sportier, roomier cars like their Mini Countryman and a BMW 3. They're mostly doing business overseas—they've got 800 cars in Berlin—but they're up and running in San Francisco. Steinberg told me: "We're hesitant to confirm anything officially, but clearly we're focused on a market like Seattle... and we have been waiting patiently for that legislation to make its way through the council. Assuming it all gets approved, we certainly would get into far more detailed discussions about getting a certain number of those new permits, so we could introduce our service in the Seattle market."

Neighborhood parking permits, known as RPZs, are reportedly one issue delaying the legislation. 

The legislation, originally cued up for December, is on hold until January; city council transportation committee chair Tom Rasmussen, the council sponsor, is reportedly still trying to lock down the appropriate cost for the permits, which Murray's legislation priced at $1,703 a piece.

One issue may be the Restricted Parking Zone (RPZ) part of the fee; RPZ parking permits are neighborhood parking spots. The market value is about $1,000 (Car2go currently only pays $200 for its RPZ parking rights and Murray's legislation increases it to $700. It's not priced at the full $1,000 because carshare cars, which park all over town, don't take advantage of the full value of those spots. However, the bounce from $200 to $700 may be giving Rasmussen—and the carshare companies—pause.)

It's worth noting that handing over parking spots to car sharing companies doesn't diminish the city's parking revenue. Companies are required to make up the difference if the permit revenue doesn't match the number of hours their customers ultimately end up using. For example, Car2go paid an additional $183,000 to "true up" last year. The fiscal note on the legislation estimates $2.2 million in revenue next year. 

Steinberg says they would start with fewer permits than the 500, but "as the market demands, we would certainly add more cars to the fleet and cover the whole city."  

Another potential competitor, Zipcar—known more for its round-trip model—does have a one-way trip model, but rather than relying on free-floating parking, they use lots and have a "point-to-point" model. 

They say their point-to-point alternative to Car2Go reduces congestion because there's no circling the block looking for that one free-floating spot. They also say their point-to-point model will better serve low-income and underserved communities because with locked in Zipcar lots, they can control where the cars end up rather than having cars pile up downtown, for example.

Steinberg said he sees the "logic" of Zipcar's model, but said having more competitors would alleviate the problem of having cars pile up downtown during the day and back in neighborhoods at night. (Good luck getting a Car2go downtown after 6pm.)

Steinberg says: "What’s going to happen, assuming this legislation is approved, is you’ll have us and others enter the market, and the critique you’re seeing with Car2go today, 'Hey I can’t get a car downtown in the evening'...our entrance and others' will make more availability and relieve that stress point and create competition." 

Editorializing myself here, but two red flags about Zipcar's model: Having fixed points: A) limits where drivers can go and  B) requires plenty of new parking lots rather than efficiently taking advantage of the current right-of-way infrastructure of the city.


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