Published October 10, 2011
General Motors has announced that it will update its OnStar vehicle communications system to facilitate peer-to-peer car-sharing. Thanks to a partnership with RelayRides, a San Francisco-based startup that allows users to rent their cars out to drivers-in-need on an hourly basis, GM vehicles equipped with OnStar will be able to be unlocked and started via cell phone—eliminating the need for the costly $500 device currently used for remote locking. All OnStar-equipped GM models—including the Chevy Volt plug-in hybrid—will be RelayRides-ready beginning next year.
RelayRides was launched in Cambridge, Mass., in 2010 with a staff of just four employees, but interest in the project quickly grew, and after raising two successful rounds of startup capital, the company moved its headquarters to San Francisco. The company is still limited to just 2,000 members and about 100 vehicles, but with the announcement of the GM partnership, that should change soon.
“People’s driving patterns and buying habits are going to2 change, particularly young people,” said GM Vice Chairman Stephen Girsky to The Wall Street Journal>. “There are a number of new competitors and new business models; we need to be mindful of them and look for ways to take advantage of them.”
RelayRides is currently only available in San Francisco and Boston but has plans to expand in the near future. Given GM's interest in the company and decision invest in the peer-to-peer car-sharing model both financially and in its OnStar software, it's likely that expansion will be substantial.
Participating vehicle owners can set their own price for the rentals, typically charging $6-12 per hour. Of that money, the loaner gets to keep 65 percent, with the remaining money going to RelayRides's profit margin and to pay for insurance. Crucially, users who rent their cars through RelayRides don't need to worry about damage to their car or other liabilities, as each rental is insured for up to $1 million. If a car is returned late or damaged, the borrower must pay fines that are transferred directly to the owner.
Car-sharing is becoming an increasingly popular choice for urban residents who occasionally need to use a car but don't consider owning one to be a practical option. Since 2009, the car-sharing market has grown from 400,000 users to more than 640,000. According to the market research firm Frost and Sullivan, that number is poised to grow to 4.4 million by 2016.
