Editor’s Note: On Tuesday, peer-to-peer carsharing pioneer Getaround announced a $1.7 million Federal Highway Administration grant that’ll bring the service to Portland. This guest post is by Michael Andersen of Portland Afoot, a 10-minute newsmagazine and wiki about low-car life in PDX. Michael adapted this piece from the magazine’s October cover story.
When it comes to Portland next month, peer-to-peer carsharing will be ready to slice and dice car ownership by letting any household turn their own car into a Zipcar.
But to Sightline readers—and to most folks who read my little newsmagazine for transit commuters—the concept of personal carsharing is old news. That’s why this summer, I took a trip straight into the future: south to San Francisco Bay, where the carsharing technology of tomorrow had been on the ground for six months.
Forget the concepts. I wanted to know the nuts and bolts: Who was sharing cars? What were they charging? And how do you report carsharing income on your taxes?
I wound up interviewing carsharing experts up and down the coast. Here’s what I learned.
1) It’ll be available everywhere.
Eugene Cordero, an early Getaround adopter in Mountain View, CA. Photo by Michael Andersen.
Mountain View, Calif., is a South Bay city so committed to suburbia that zoning laws forbid homeowners from removing their garages. That low density makes it the kind of town that Zipcar, whose every vehicle must be driven about six hours a day in order to break even, can’t penetrate: there isn’t a single public Zipcar in city limits.
But Getaround has 15 cars in Mountain View. Why? Because private car owners don’t need to recoup the entire cost of their car through sharing. They just want a little cash on the side. This is the promise of personal carsharing: it makes one-car households possible in any neighborhood.
“It’s going to allow carsharing to operate in much less dense areas,” said Dave Brook, who invented commercial carsharing in Portland in 1998. “It changes the economics of the carsharing company.” (Editor’s Note: Dave has also been a guest poster for Sightline.)
I tracked down three Getaround users in Mountain View to ask how it’s worked for them. Short version: it helps to work at home—and to live near the train station.
2) It’ll all depend on scoring a “Carkit.”
Dave Brook, courtesy of Michael Andersen.
Carkits are Getaround’s name for the proprietary, user-installed boxes that allow keyless entry to private cars. Brook, now a carsharing consultant, estimates that once they’re in production, each will cost $400 to $500. Getaround plans to give away 500 free; after that, they might sell carkits to users or award them to the car owners who build up the most impressive peer reviews on Getaround.com.
For car owners, carkits will be the secret to steady revenue—the trick to becoming Kari Signor, who according to Getaround VP John Atcheson parked her Nissan Xterra in central San Francisco and is “basically living off her car income as she hikes around Peru,” he said. “The latest word back was, ‘I’m just going to keep doing this.'” (Editor’s Note: John Atcheson is also the volunteer chair of Sightline Institute’s board, a position that led him to his interest in car-sharing, not the other way around.)
3) It’ll include a hidden tax break.
Under Oregon law, you won’t be allowed to earn more annually than your car costs to operate—that’d require a commercial insurance policy. But according to Portland accountant Emily Kingan, it’ll be fine to deduct from your carsharing income the full IRS rate (currently 55.5¢) for each mile driven during carsharing … even though, because the renter buys the gas, your true cost per mile is probably 11¢ or less.
“Strange but true,” Kingan said. Yes indeed; Brook backs her up.
4) Libertarians will love it … if it can get off federal subsidies.
There was an audible gasp when, during an Oregon House committee hearing last spring on personal carsharing, a surprise guest strode to the front of the room.
It was John Charles of the Cascade Policy Institute, a Portland-based free-market think tank so committed to auto transportation that it sometimes sends people to observe little-used bike lanes, counting cyclists in order to ridicule their small numbers. Had he arrived to kill the carsharing bill?
Charles began speaking almost shyly. “I wasn’t actually going to testify,” he explained. “I’m waiting for another bill. But I’m fascinated by the whole conversation. … Owners can get into business without years of delay. Owners can set their own rates based on the type of vehicle they have: $10 an hour, $8 an hour, $50 an hour. … Consenting adults can voluntarily engage in transactions where mutual gain is perceived. … Wonderful concepts.”
Charles quietly left the stand. The bill passed 47-10.
5) It’ll be a back door to mileage-based insurance.
For years, usage-based auto insurance – paying by the mile or hour driven, not by the month – has been the sweetest dream of transportation wonks. But insurers have resisted. The solution? Carsharing. Insurance is paid by the hour, but negotiated in bulk.
Getaround VP John Atcheson said the firm put huge effort into persuading its insurer, Berkshire Hathaway, to charge Getaround based mostly on usage. Under Getaround’s policy, a car borrower receives a perfect duplicate of the car owner’s coverage—but Getaround doesn’t pay a penny until she actually slips behind the wheel.
Portland Afoot’s December cover story looks at East Portland’s 10 dumbest transportation problems. Sightline readers in the Portland area can subscribe for $10 a year with discount code SIGHTLINE.
Dave Brook
Interesting article. Since I’m quoted in this article I’d offer the following comments:
I hardly “invented” commercial carsharing — since it had been going on in Europe for more than 7 years when I started my company in 1998.
I’m no accountant so really can’t “back up” whether deducting 55¢ per mile is appropriate or not. Only the IRS knows for sure. Let’s hope the tax accounting for P2P doesn’t get as complex as dealing with rental real estate.
I think there’s already plenty of evidence from California that “key swap” owners can make good money renting their cars out. However, I consider “key swap” to be much closer to car rental than carsharing. (Nothing wrong with car rental, mind you; I do it several times a year.) As I’ve discussed on my blog (www.carsharing.us) my definition of carsharing specifically includes the requirement of “unattended access” to the vehicle, which would rule out direct “key swap” with the owner.
This is more than semantics If carsharing is going to serve as an alternative to ownership it has offer a level of convenience as close to car ownership as possible. Having to meet the owners to get the key strikes me as a major inconvenience. There are low-tech ways to provide unattended access, however: It would be easy enough to provide low tech unattended access by putting the vehicle key in a mechanical lockbox mounted nearby and providing the code to the renter. (But it’s worth noting that the in-car technology can provide additional security benefits, such as GPS.)
And finally, while Getaround obviously scored big with the Value Pricing grant, it’s important to remember it is a research grant and will provide useful information for government agencies and others to use in quantifying the benefits of P2P carsharing when considering appropriate relationships with P2P companies in transportation policies.
Michael, Portland Afoot
Thanks for the response, Dave — all excellent points, I think. Our discussion of the tax writeoff issue was brief, and perhaps I should have been more careful to assess how confident you were about confirming Kingan’s judgment. (For the record, I’ve never met or worked with Kingan; I was told she’s got more experience than many in low-car accounting questions.)
As for “invented,” I’ll defer to your judgment. My impression (largely informed by the NYT Magazine piece from a while back) had been that your concept wasn’t informed by European carsharing, at least initially. WHAT DID YOU KNOW AND WHEN DID YOU KNOW IT, Dave? Either way, I agree that “invent” may be too much. I appreciate your attention to getting this right.
John A. Charles Jr.
Michael Anderson obviously does not understand the nature of our work at Cascade. We are neither for nor against private auto transport as a stand-alone concept; we simply support individual choice in these and other matters.
And though we have occasionally monitored bike facilities such as the under-used wonder on SE Holgate or the unused bike parking facility at Sunset transit center, more than 95% of our research is focused on so-called “Transit-Oriented Developments.” We do field observations to find out how people travel when they live/work in close proximity to light rail. We monitor all trips in/out, inlcuding bike, ped, auto and transit. We have nothing against bike use and simply report what we observe.
My testimony on the car-sharing bill, which I repeated in the Senate, was focused on the admirable concepts of the bill, including free-market pricing and low regulatory barriers to entry. I noted that if the legislature supported these ideas in this context, perhaps they could eventually support them in other policy arenas, such as breaking the over-regulated urban taxi cartels, and allowing direct private competition to transit monopolies.
Of course this was said somewhat in jest and one House committee member (Jefferson Smith, now running for Portland mayor) jokingly asked the bill’s proponent (Ben Cannon) if he was going to withdraw the bill now that I was supporting it.
I was glad it passed but very disappointed to see $1.7 million of fed pork brought in to subsidize it. Of course this was entirely predictable. It’s also predictable that this idea will now never reach self-supporting status in Portland — following the model of transit after the for-profit, dividend-paying bus companies were deliberately put out of business by the City Council so they could create a subsidized transit agency.
web technology
3. You can just use 3D touch instead…