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The Gunther Report

Why GM is working with car-sharing firm RelayRides

<p>Why would the world&#39;s largest auto maker invest in a company that helps people use fewer cars?</p>

General Motors is in the business of selling as many cars as it can. But Shelby Clark, the co-founder and chief community officer of RelayRides, a peer-to-peer car-sharing service that's partnering with GM subsidiary OnStar, says you may not need to own a car.

So why is General Motors working with RelayRides? That was the question on my mind the other day when I moderated a panel called Connected Cars and Beyond at GreenBiz's VERGE DC conference. 

Clark was on the panel and so was Nick Pudar, vice president of planning and business development at GM's OnStar unit. GM Ventures, the venture-capital arm of General Motors, has invested in RelayRides. (See my blog post, "Car sharing revs up with backing from Detroit heavyweights.") Its OnStar unit is going further, by making it much easier for RelayRides to do what it intends to do: play digital matchmaker between car owners with renters.

I GM subsidiaries have invested and partnered with car-sharing company RelayRides.don't own a GM car, so my impressions of OnStar come from the long-running radio campaign featuring real calls to On Star, most following accidents or breakdowns. It turns out that Onstar is much more than a safety and security service, as Nick explained.

GM owners can get monthly diagnostic reports, reminding them when it's time for an oil change. A mobile-phone app, originally developed for the Chevy Volt, enables owners to remotely lock and unlock their car. (I'm told that, on average, people lock their keys in their car about once every eight years, but with 6 million customers, that means that in a typical month, OnStar unlocks more than 65,000 doors.)

The technology also permits owners to start their car remotely. (Nick said when he lands at Detroit Metro Airport in winter, he uses it to warm up the car when he's on his way to the parking lot.) Of course, OnStar offers navigation and hands-free phone calling, too. And it's a nice business for GM, with about 6 million customers who pay at least $199 a year.

The "connected car" idea comes into play because OnStar recently opened up its APIs (application program interface) to independent software developers. Like Facebook or the iPhone, OnStar will become more valuable by allowing others to write apps for its platform. So if you own an electric car, for example, you can connect it to the grid and tell your local utility to recharge the battery when electricity rates are low. Or your car can be programmed to learn your driving patterns, thereby enabling it to warn you about a traffic jam and suggest an alternate route home when you turn it on after a day at work.

RelayRides is the first partner to be accepted by the OnStar platform because it will make car sharing so much easier. GM vehicle owners will be able to use OnStar to rent out their cars, while still controlling their own rates and car availability, and borrowers will be able to use their mobile phones to lock and unlock the vehicles. Currently, RelayRides requires either a face-to-face exchange of car keys or asks owners to install special equipment inside the car, which adds costs while creating an obstacle to sampling.

The goal, Shelby said, is to make it as easy as possible to "use RelayRide to find convenient, affordable transportation right in your neighborhood.” RelayRide launched in Boston and San Francisco, but recently became the first of a bevy of peer-to-peer car sharing firms to go national. Renters typically pay $5 to $9 per hour, and owners get 65% of the revenues, with the rest going to RelayRides.

The median age of both owners and renters is the mid-30s, and they aren't entirely motivated by money. "Frequently, it's the environmental and community benefits they like," Shelby said. Some of the environmental benefits of RelayRides are obvious. (Fewer cars get made if people learn to share.) Others are subtler: People will drive less and combine trips when they are laying out cash every time they get behind the wheel.

GM hopes that if more owners of OnStar-equipped GM cars join RelayRides, renters will like what they see. Nick said the company aims to provide a variety of "personal mobility solutions." When I raised a skeptical eyebrow, he explained: "It's still about selling cars, but it's about selling cars that meet all the needs of people and society.

Here's a video of Nick Pudar explaining why OnStar opened up its platform to outside developers:

Photo of cars courtesy of Edwin Verin via Shutterstock. Photo of Nick Pudar courtesy of GM.

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