Earlier this month, the popular car-sharing service Car2Go announced that it was leaving the Twin Cities at year's end.
The company, a division of carmaker Daimler North America, said the decision was prompted by the "extremely high" taxes Minnesota charges for rental cars. Conventional rental cars, typically used by out-of-town tourists and business travelers, are taxed at the same rate as car-sharing firms, often used by locals who patch together car- and ride-sharing with transit and bicycles for their commutes.
This prompted regret and outrage on social media from devoted Car2Go users, some of whom blamed Minnesota's "high-tax" environment.
One reader e-mailed a Twitter screengrab where Car2Go said taxes were part of the decision but that they "weren't seeing enough adoption to sustain our model." Although Car2Go pared back its service area here last summer, a company spokeswoman said Monday that their social media team got things confused and was referring to the usage issue in San Diego — where service also will be suspended by the end of the year — and not the Twin Cities.
Car2Go users reserve tiny Smart cars via a smartphone app after paying a $35 annual fee. Generally, users pay 41 cents a minute, or a daily rate. Once you reach your destination, you leave the car there. Other car-sharing firms, such as Zipcar and Hourcar, begin and end in the same transit hub. And ride-sharing firms like Uber and Lyft pick up patrons in drivers' personal cars.
After Car2go's announcement, University of Minnesota Prof. David Levinson wrote in his Transportist blog that in order for car-sharing to work, "access costs must be low, generating demand, which will increase vehicle availability (as suppliers respond to demand), which will lower access costs, which will increase demand."
Levinson said that the existing Car2Go fleet could have accommodated more customers (Car2Go has 400 vehicles and about 29,000 members in the Twin Cities). He also points out that with gas prices so low and the economy relatively strong, people can readily drive and buy their own cars.
A study released last year by researchers at the University of California-Berkeley found that car-sharing member growth worldwide peaked in 2014. The report, which surveyed some 9,500 Car2Go users in five cities (none in Minnesota), said access to car-sharing fleets permitted some residents to get rid of their car or avoid buying one altogether.
Services like Car2Go were found to "both substitute and complement public transportation" as well as walking and biking, and reduced the number of cars on highways.
Still, transportation experts wonder what will happen to the car-sharing model once driverless cars take hold. Conceivably, we could summon those cars just as we do with Car2Go. A study by the Wall Street firm Morgan Stanley says "a future of shared, fully electric, driverless cars on demand is closer to reality than it might appear." The global auto market, the report states, "is ripe for major disruption."
The development of autonomous vehicles will be complex, the report adds. In the United States, the technological and economic landscape for this mode of transportation is encouraging, given Silicon Valley's embrace of the technology. But "private car ownership is deeply woven into the American cultural fabric."
In other words, most people don't want to give up their cars — and that could be even harder to do now that Car2Go is leaving the market.