BMW and MINI Enter the Sharing Economy as Seattle Proves Itself a Leader in Legislation
By Grady Hepworth
This month, Seattle drivers were treated to a new transportation option that will allow hundreds of citizens to ditch their old clunkers for fresh, new, German-engineered wheels. On April 8th BMW officially announced that it would be starting its own car sharing service, ReachNow, with the pilot program and headquarters to launch in Seattle. BMW, and its subsidiary MINI, have hopes to expand ReachNow to cities across North America in order to compete with established sharing services like Car2Go or Zip Car, and even chauffer services like Uber and Lyft.
ReachNow believes it can offer consumers a superior car sharing experience compared to its competitors. Unlike rival Zip Car, whose cars must be returned to designated parking places, ReachNow allows drivers to park and leave their cars in any street parking spot within city limits (much like the service that Car2Go currently offers). The company is offering an initial “fleet” of 370 five-passenger vehicles, consisting of the BMW 3 Series sedan, the BMW i3, and the Mini Cooper. ReachNow further believes these vehicles will allow drivers, particularly families, more flexibility than Car2Go’s two-passenger Smart cars. ReachNow charges drivers a one-time membership fee of $39, but only $0.41 per mile when using a car.
The City of Seattle has led the country by directly embracing car sharing, crediting the services with providing relief to traffic congestion, parking shortages, and a deficit of affordable commuter options. City of Seattle Ordinance No. 124689 (Ordinance), which should be considered model legislation for car sharing services, was amended in January 2015 to accommodate ReachNow’s new cars that join over 600 Car2Go vehicles currently available to Seattle drivers. Through the Ordinance, Seattle charges “free floating car” services a $1,730 annual fee per vehicle. For services such as Zip Car, that require designated spaces, the city charges anywhere from $300 a year for spaces in unpaid street parking locations, to as much as $3,000 a year where there is paid on-street parking. These fees can add up to serious revenue. The Seattle Department of Transportation has reported that Car2Go paid the city about $1.3 million, and BMW paid about $532,000 for services in 2016. SDOT has reported almost exclusively positive consumer feedback in response to the city’s car sharing program.
However, not all cities have been so quick to accept car sharing services. Although general skepticism exists about the new “sharing economy,” some municipalities have expressed specific concerns about the effect these services have on parking, as well as the liability drivers may face in the event of an accident (ReachNow maintains state-mandated liability insurance for every vehicle, but members may be charged a $500 deductible at a minimum if they are found at fault for an accident). San Francisco has been particularly unwelcoming to “free floating” car sharing services, forcing BMW to abandon the predecessor to Seattle’s ReachNow program in November 2015. And San Francisco has allocated some designated spaces to services like Zip Car, the city refuses to issue “free floating” permits to services like ReachNow or Car2Go. Even for the designated spaces, the city has been unable to provide a sufficient number of spaces for existing services to expand and meet consumer needs.
Despite the resistance car sharing companies like ReachNow have had to overcome in cities like San Francisco, the future of car sharing is still bright. Along with the ReachNow announcement, BMW noted plans to launch a chauffeur service to directly compete with Uber, as well as technology that would allow private vehicle owners the opportunity to rent their personal vehicles to ReachNow members, calling the service an “Airbnb on wheels.” In addition to BMW’s car sharing expansion, other companies such as Jaguar Land Rover, General Motors, and Volkswagen have all expressed similar desire to enter the market for shared driving. As consumer demand increases for such services, municipalities around the country will be pressured to make legal adjustments and accommodations. Seattle should be applauded for the way it has facilitated these services. Don’t be surprised if other cities seek to emulate Seattle’s legislation and vision.
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