Car sharing revs up with backing from Detroit heavyweights

Who would have thought that Bill Ford, the executive chairman of the Ford Motor Co., and GM Ventures, the venture capital arm of General Motors, would invest in peer-to-peer car sharing companies?

The big automakers historically craved market share, which means selling as many new cars as they can. If Americans decide that they don't need a car -- or maybe that they only need one, instead of two or three -- the car companies could be hurt.

But Bill Ford's Fontanalis Partners, a firm that invests in "the future of mobility," invested last month in a campus-based car sharing startup called Wheelz, and GM Ventures is backing RelayRides, another startup that announced Monday that it is rolling out its service nationally.

Maybe the peer-to-peer car sharing biz is going to be a big deal. Certainly it's revving up.

To learn a little about car sharing, I arranged to speak last week with Jeff Miller, the co-founder and CEO of Wheelz. Next week, I'll interview Shelby Clark, the founder and chief community officer of RelayRides, at VERGE DC, a conference organized by GreenBiz, where I'm a senior writer. (Please join us a VERGE DC if you can.) I'll also be interviewing Steve Case at VERGE; he's been an advocate for the sharing economy as an investor in Zipcar and in a vacation home-sharing company. [For more, see How Steve Case and his company are driving the sharing economy in The Atlantic and my own blogpost, The sharing economy and me.

Miller, who is 33, co-founded Wheelz last year with Akhtar Jameel, who formerly ran R&D for Mercedes-Benz North America. The company said last month that it raised $13.7 million from Zipcar and Fontinalis Partners. It currently operates on two college campuses -- Stanford and Berkeley, with USC and UCLA coming soon -- and it wants to expand, as rapidly as possible. It's one of a slew of peer-to-peer car-sharing companies that want to scale up because, otherwise, they could be left in the dust.

That's because peer-to-peer car sharing is a business that will be shaped by the network effect -- that is, the business and its network will become more valuable and useful as more people participate. The network effect helped build eBay, Craigslist and, for that matter, Zipcar which has become the dominant car-sharing brand.

Unlike Zipcar, peer-to-peer sharing companies like Wheelz and RelayRides connect individual car owners with renters, who typically pay $5 to $10 an hour for a car. They rely on mobile and Internet platforms that manage reservations, provide insurance, make payments and use electronic and GPS technologies to make it possible for the renters to unlock (and then lock) cars. It sounds complicated, but it's not.

And as companies like RelayRides and Wheelz like to tell you, peer-to-peer car sharing solves a widespread problem -- some people want mobility without owning a car, while some owners of cars that site idle would like to earn extra income (sometimes thousands of dollars a year) by renting.

"Does it really makes sense that cars are parked for 23 hours a day?" Miller asks.

Next Page: How Wheelz and RelayRides are different from Zipcar