This is an excerpt of a blog published by Matthew W. Daus, Esq., in Black Car News. The full blog can be viewed here.
In the future, it is likely that we will see more cross-pollination between car rentals on the back end of mobility services. A for-hire or TNC (Transportation Network Company) driver who owns their own vehicle may wish to drive for-hire one day, rent the vehicle to another TNC driver who does not own a car the next day, and the next week rent the car to a passenger to use for a vacation or business trip.
The sharing of vehicles on a platform serves as a potential method to reduce the costs of ownership, allow for flexible working environments, and to hopefully, over time, reduce the costs of transportation to passengers. Ultimately, these platforms in the short term will involve more merging of services between car rental companies and individuals on the back-end for supply purposes; on the demand side, passengers or renters will be able to open either a car sharing, TNC, or other platform app to choose between a quick ride with an assigned driver, or the app user can rent a car for an extended period of time without an assigned driver.
These on-demand options and business models are rapidly evolving and are already happening on some levels.
It is inevitable that public transit agencies may even get in on the action for first and last mile and other Mobility-As-A-Service options. For example, a commuter who takes the train can rent a car located in a parking lot at the train station when coming home on a Friday night and then return it Monday morning while on the way to work.
The provision of on-demand booking, numerous mobility options, and convenience are inevitable. The implementation of a public and private platform where passengers or renters can load credit card information to pay for public transit and private rentals interchangeably presents liability or duty of care, data management, and other complications or sticky legal issues when involving governmental services and operations.
A more likely way these services can be implemented in tandem with public transit would be franchises or concessions at or around municipal parking and transit curb space locations, with the outsourcing of app functionality and services to one or more private companies that can interface directly with the public.
Safety, Liability, and Insurance
It is refreshing to see that the carsharing industry is not engaging in illegal disruption as the TNCs did in their nascent rise by issuing ultimatums to regulators and simply ignoring laws and rules to commence operations, and then changing the laws after the fact. The TNC laws that were passed over the years came after — not before — the introduction of TNC services.
Here, with the exception of New York State as an early warning to the industry, it appears that laws are being crafted, like in Maryland, to accommodate and encourage carsharing while addressing the liability, insurance, and other safety/regulatory/consumer issues — before the fact, not after. This will allow investors and consumers to feel more confident and will allow the industry to scale better and faster if the example of Maryland is followed elsewhere.
The insurance industry and insurance regulators must keep-up with these new sharing models and find a way to make them work while protecting the public interest. Success or failure of the carsharing industry — across all the business models — rests with regulators and private insurance companies embracing the changes and figuring out ways to reduce risk and costs to consumers and insureds. Some of the new laws are encouraging, but more needs to be done, including flexible ratemaking and filings for flexible carsharing models.
Any inertia or resistance will stifle innovation in this sector. Likewise, tax laws should be conformed to create an even playing field and uniformity, possibly eliminating such taxes for everyone to encourage the use of shared mobility services.
It is all so very important that the cross-pollination of carsharing and vehicle rental with for-hire and other mobility services happens now, with as much experimentation as possible with public and private mobility platforms on both the front-end (demand/consumer facing) and on the back-end (supply/driver and car rental company inventory sharing).
The results of these experiments are likely to guide both public and private decision making on autonomous and connected vehicle implementation. The sharing of vehicles is an important part of our mobility future, especially as consumers expect the price or costs of transportation to stay low or reasonable. The partnerships between automakers and carsharing, car rental, and mobility companies could be motivated by any number of reasons, such as innocent experimentation, joint ventures and brand merger.
There could also be more nefarious motives — such as spying on the competition or possibly even buying companies to put them out of business so that automakers can continue to sell cars to the masses without sharing.
All possibilities are on the table right now, but the partnerships and experiments of today will be the future of autonomous mobility, where automakers or technology or mobility companies could turn technology platforms and apps into the deployment and sharing of automated vehicles owned by the government, private individuals, or companies, with any combination of ownership and sharing options.
It is truly mind boggling to think of where this could go. For now, everyone in neighboring spaces should be aware of these issues and trends because if overlapping companies in the ecosystem are not aware of where they are or should be in the ever-evolving food chain, certain transportation species or companies could find themselves facing extinction.
Daus is a partner at Windels Marx Lane & Mittendorf, LLP. and currently chairs the Transportation Practice Group Transportation Technology Chair, City University of New York (CUNY). He is a former commissioner of the Taxi and Limousine Commission in New York City. At the 2019 International Car Rental Show, Daus presented the closing keynote address “Lessons from TNC Disruption and the Transformation Ahead for Car Rental.”
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