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Study examines potential for alternatives to new car ownership models to advance EV market
24 December 2012
A new study by the RAC Foundation and the British Vehicle Rental and Leasing Association (BVRLA) examines the potential for alternatives to new car ownership models to kick-start the electric vehicle market. The paper, “Car Rental 2.0”, summarizes the findings from a joint seminar held by the RAC Foundation and BVRLA earlier this year on alternatives to car ownership: car rental, traditional and one-way car clubs, and ridesharing.
The paper also explores the role of local authorities and central government in creating the necessary policy framework for car clubs and the rental market to mature.
Car clubs and car rental operators are seen as an important testing ground and route to wider adoption for plug-in electric and other ultra-low-carbon vehicles. One of the biggest barriers to electric vehicle uptake by private individuals is that of cost, particularly high upfront purchase costs. This problem could potentially be overcome by offering electric vehicles through car clubs or rental operators, which would be more able to absorb the higher initial cost of ownership, although it would inevitably result in higher rental rates for these vehicles.
Research suggests that there is a great match between the car rental market and potential electric vehicle buyers/users, supporting the argument that offering these vehicles on a pay-as-you-go basis could increase their use and visibility. For people who are unsure about making the move to electric vehicles, car clubs and car rental offer an ideal opportunity to test-drive technology and establish whether it meets their transport needs.—“Car Rental 2.0”
However, the report notes, there are three practical issues retarding the wider adoption of electric vehicles in car rental and car club fleets:
High purchase and operational costs, linked with uncertainties about depreciation and resale value.
The practicality of recharging conflicts with the way car club and car rental cars are used. High turnover of vehicles (and potentially high mileage) means that the vehicles would need to be recharged frequently, which in many cases would be physically impossible because of long recharging times and the need for charging points at each on-street parking bay. From this perspective, electric vehicles may be more suitable for depot-based car rental, where vehicles are parked for longer periods of time and there is easier access to charging points. Rapid charging can make plug-in electric rental cars much easier to ‘turn around’ for their next customer, but these points are costly to install and over the long term may degrade the battery more quickly.
The limited range of electric vehicles will make them unsuitable for most long journeys. For shorter trips or one-way journeys, the range is less of a concern although recharging remains problematic.
Questions for further research in this area include:
What is the net impact of alternative forms of car access on greenhouse gas emissions? (One-way car rental is of particular interest.)
What is the cost per tonne of CO2 saved for the different types of car access (assuming the carbon impact is positive)?
What is the driving style of car club users in terms of safety and fuel efficiency? And how does this compare to car rental and peer-to-peer car sharing?
General benefits of Car Rental 2.0, pay-as-you-go. According to the report, these different pay-as-you-go motoring business models can complement each other as well as other modes of public transport. Technology, in the form of integrated ticketing or smartphone apps and in-car communications has the potential to link them all together, creating a ‘mobility mix’ that helps travelers choose the cheapest, cleanest or quickest appropriate way of completing their journey.
However, the report notes, these pay-as-you-go alternatives to car ownership face a number of challenges, including:
Barriers at the local level. While some local authorities are proactive at encouraging alternative forms of car access, others are not involved at all. Authorities may not know how best to support such schemes, and this problem is exacerbated by the fact that policymakers are struggling to understand the rapid development of new and evolving pay-as-you-go-motoring business models.
Integrating with other modes of transport and the role of technology. The most difficult challenge, according to the report, is the array of stakeholders in the transport sector, usually with multiple operators in each mode. A lack of political leadership aggravates this fragmentation. On a practical side, parking spaces are crucial for the success of car club schemes.
Car club-specific challenges. As the car club sector grows and matures, it faces a number of specific challenges such as damage checking of vehicles and utilization patterns that see vehicles sitting idle during the week, but swamped by demand at weekends and other key times.
Insurance and operational costs. Car club and rental companies also face the challenge of balancing insurance risk and operational cost on the one side, and improving access (and the customer base) on the other.
Although it is often claimed that one car club vehicle takes multiple privately owned cars off the road, the net effect on travel behaviour, i.e. whether the aggregate distance travelled is less or more, is not entirely clear. Research suggests that overall mileage does reduce: while some people drive a bit more, those that drive less, drive a lot less. Whether or not this is true, car clubs and other forms of car access must be encouraged, where possible, to replace permanent car ownership, and not to displace journeys on more sustainable modes – most notably cycling and public transport. Ways of ensuring this include marketing and using pricing mechanisms to reinforce the right behaviour (e.g. car clubs charging per mile rather than a flat-rate time fee to encourage people to think about mileage).—“Car Rental 2.0”
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