Zipcar or Flexcar? – Motoring Innovation now Both

by Braden Kelley

Earlier this week Zipcar announced that it was acquiring Seattle-based Flexcar. For those of you not familiar with either company, they are both pursuing the same innovation – rental cars available by the hour parked down the street–not by the day parked at the airport.

Most people these days operate on the paradigm of owning a car for every adult in the household (if not more than one). A car used 15,000 miles per year at an average speed of 30mph equates to 500 hours of use (less than 1.5 hours per day – or about 2hrs/day at 20mph). This results in most cars sitting idle 22 of every 24 hours. If the owner takes public transportation to work, idle time increase to 23 of every 24 hours for the vehicle.

Depending on your tastes, it costs about $6,000 to have a car (loan pmt., gas, insurance, repairs, etc.) – or coming at it a different way, this also equates to $.40/mile x 15,000 miles. Building upon the above example, a car used 500-750 hours per year thus is costing its owner between $80 and $120 per hour to use. This is where the innovation of Zipcar and Flexcar comes in. They are competing against car ownership by offering people vehicles for rental at about $10 per hour all-inclusive (plus a small annual membership fee) that are parked down the street.

The proposition is incredibly powerful once you break through the mental barrier of feeling the need to have your own car. Many people in cities like New York and San Francisco don’t even own a car, and Flexcar and Zipcar enable even more people to join the ranks of the car-less.

Personally, our family of three has one car and I can easily take a bus or a plane to client meeting (or even a taxi) and come out ahead from both a financial and a productivity standpoint (many of my blog entries are written on the bus). I found myself a little bit excited when I saw a Flexcar parking spot a few blocks from my house. Not that we feel a need for a second car right now, but it is nice to know that the option exists nonetheless should the need suddenly present itself.

When you start running the numbers, it quickly becomes apparent how incredibly capital intensive the United States transportation model is and how much of our GDP is sitting idle 22-23 hours a day. If we could all break down our mental models to accept a different reality, particularly in our densest cities, we could create a replacement reality of better, more frequent mass transit and shared cars on every block, putting capital back into the system to be re-allocated in a more beneficial way to society. Wouldn’t that be a true innovation?

What do you think?

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