FREE-FLOATING
ALL-ELECTRIC
CITY CARS
The combination of a free-floating carsharing service and all-electric cars is attractive to both society
and users. Free-floating carsharing services offer city dwellers a convenient mobility solution, while
all-electric cars contribute to a fossil-free society and decrease oil dependency as well as particle and
noise emissions.
Car ownership in cities is associated with more and more
concerns. Parking spaces are getting fewer and more
expensive, and congestion is an exploding problem in most
large cities. Public transportation is the solution in many
cases, but sometimes a more flexible solution is needed.
more or less anywhere within a given area, which means
one way trips are enabled. This type of service is very
attractive for users, and it also increases the utilization of
the cars in the carsharing service, giving a faster payback
on the operator’s investment.
Carsharing services can be a flexible complement to public
transport in cities. This type of service does not burden the
users with high investment costs and it relieves them from
the concerns of car ownership. A free-floating carsharing
service can be the optimal offer for city dwellers. In a freefloating carsharing service users can find and return a car
A flee-floating carsharing service with all-electric cars will
lead the way to increased all-electric car usage through a
generally increased access to charging places, increased
consciousness about the all-electric alternative among car
buyers, and improved scale of economy in the all-electric
car production.
THIS IS HOW IT WORKS
The customers are both private persons and employees on
business errands. Typical private customers are people who
have no car of their own, or families who use the service
instead of owning a second car. For people living in city
centers it is an added benefit not having to bother about
parking. Companies may benefit from using the electric
carsharing service instead of compensating employees for
driving their own cars and supplying them with parking
places. They can also add goodwill as a benefit, since
using an electric carsharing service indicates care for the
environment.
Redistribution of cars is one of the main challenges for
the operator of this business model. To minimize the need
for having employees moving cars around, customers are
encouraged to drop the car of in an area where there is
a shortage of cars, rather than in an area where there is
Illustration: Stefan Pihlgren
You go by taxi but you are the driver. That is how free
floating carsharing works. As user, you pay per minute of
use, and that’s it. The typical customer is a city dweller who
finds it increasingly annoying to own a car in the city but
still wants personal mobility beyond what public transport
and taxis can provide. With free-floating all-electric city
cars, you don’t have to pre-book, stick to a certain time
interval or leave the car where you took it.
A free-floating car sharing service is established within a
designated city zone. Within this area, users may pick up
and return the car on any public parking spot. To avoid
empty batteries the user is required to return the car at a
charging station and make sure it is charged if the battery
charge is below a given level. The user pays per minute
of usage and the fee includes all costs for electric energy,
maintenance, road tolls etc.
The commercial potential of a free-floating carsharing
service lies mainly in the fact that the cars in this service
can be utilized much more than privately owned cars
normally are. The high utilization in combination with
the low driving costs of all-electric cars compensate for
the high purchase price of these cars. Since an all-electric
car doesn’t contribute to local air pollution and since
a carsharing car replaces 4-20 privately owned cars and
hence help reduce car density per citizen, all-electric cars
and carsharing services are beneficial for society, and there
are thus reasons for public actors to contribute to increasing
the attractiveness. This can be done by dedicating parking
places in city centres specifically to electric cars and at low
costs for carsharing operators, and by securing there are
sufficiently many and well located charging stations.
“You go by taxi but
you are the driver.
That is how free
floating carsharing
works.“
The customers book and have contact with the service
through a smartphone, tablet or computer, showing where
cars are located. The idea is that there should always be
enough cars available for the users to mostly book just
before use, i.e. the cars are not supposed to be reserved until
shortly before they are used. However, it is also possible to
reserve a car in advance. For using this additional service
the customer is charged a specific reservation fee.
To be able to use the free-floating all-electric city cars one
has to be a member of the service. Membership is free
of charge but requires going through a process meant to
assure that members have the necessary drivers licence and
that they really are who they claim to be.
an excess of cars, by a specific reward system. The reward
system gives the user a discount on the price of their next
drive if the car is returned in an eligible area. To further
reduce need for employees managing the cars the reward
system can also encourage users to take the car to the
carwash or to a service garage when necessary.
Visualization: Agnieszka Szymaszek
BUSINESS MODEL IN DETAIL
In this section the free-floating all-electric city cars business model is
described based on the business model canvas1 developed by Osterwalder
et al.
CUSTOMER SEGMENTS
CUSTOMER RELATIONSHIPS
KEY RESOURCES
KEY ACTIVITIES
The customers can be both private persons and companies.
To be able to use the free-floating all-electric
city cars one has to be a member of the service.
Membership is free of charge but requires going
through a process meant to assure members have
the necessary drivers licence and that they really
are who they claim to be.
The key resources for the free-floating
carsharing service are; all-electric and/or plugin hybrid electric cars, charging stations, parking
places, IT-system for booking, follow-up,
invoicing and administration, decision support
system to predict where deficit of cars can be
expected and an IT-system used in the cars for
finding charging stations, parking places and
areas where the customer can get a discount
when returning the car.
The key activities for the operator of this service are;
purchase and maintenance of cars, securing access to
charging stations and parking places, washing, cleaning
and redistributing cars, enrolling members, advertising
and to operate bookings, invoicing and follow-up.
Typical private customers are people living in the city who have
not yet bought their first car. Some customers might also use the
service instead of owning a second car.
Typical company customers have employees who mainly travel
within the city, or within an area of about 50-70 km from the
city centre. Their different kinds of business errands often have an
undetermined finish time, i.e. it is not possible to plan the return
trip at the outset.
VALUE PROPOSITION
KEY PARTNERS
COST STRUCTURE
DISTRIBUTION CHANNELS
The value proposition is access to an attractive all-electric
car, only paying per minute of use. Within a specific zone
a car should always be available at a maximum distance
of 500 meters. The cars are kept clean and maintained by
the operator.
This business model will be more competitive with a producer
of all-electric cars as a key partner. Other key partners may be
charging system suppliers (of either traditional charging stations
or inductive charging systems), IT suppliers (IT-system, car
telematics system, decision support system) and energy companies
(charging stations, connections, electric energy).
The cost structure of this business model
largely consists of costs for electric cars, parking,
maintenance of the cars, insurance, electricity
(from renewable sources), IT-systems, and
personnel.
To be able to use the free-floating all-electric
city cars one has to be a member of the service.
Membership is free of charge but requires going
through a process meant to assure members have
the necessary drivers licence and that they really
are who they claim to be.
The idea is that there should always be enough cars
available, making it unnecessary for the users to reserve a
car in advance, but to comply with business user needs it
is possible to reserve a car, from 5 minutes up to a week,
in advance. An additional reservation fee is paid for this
service.
Collaboration with the city in which this s service will be operating
is also crucial. The all-electric cars will need access to attractive
parking spaces and without support from the city this will not be
possible at a manageable cost.
1
One possibility for cost reduction is if users or
companies can be encouraged to contribute by
giving access, free or for rent, to their parking
places.
Another possibility is to minimize personnel costs
for redistribution of cars by making it possible for
users to get a discount by returning the car in an
area where there is a deficit of cars.
Available at http://www.businessmodelgeneration.com/downloads/business_model_canvas_poster.pdf (read 2013-09-03)
REVENUE STREAM
The main revenue will come from rental fees.
Since the cars will be highly visible within the
city there is also a possibility to profit from using
the cars for advertisements.
For customers using the carsharing service both privately
and at work, the costs can easily be split.
BUSINESS MODEL SENSITIVITIES
A high utilization of the cars is the main tool to make a service like this
better with all-electric cars than with internal combustion engine (ICE)
cars since the lower mileage cost will then offset the higher purchase
price.
Because of the high utilization of the cars battery warranty
conditions are the main financial constraints for the viability
of this business model. This is due to that the residual value of
a car has to be expected to be almost zero when the battery
warranty ends. An extended battery warranty will therefore
make the business case significantly more robust.
The second most important factor for the profitability of this
business model is that the city can provide low-cost or free
parking for electric cars.
A drawback of this business model is that it requires
many cars already at launch. Customers will only
be satisfied if they easily can find a car within a
reasonable distance, about 200-300 meter, and
that the designated area isn’t too small. This
can easily sum up to a need of more than 100
cars, i.e. a significant investment and hence
business risk.
BUSINESS MODEL DEVELOPMENT
This business model is proposed by the BeliEVe project
(Business model innovation for Electric Vehicles) as one
of four business models having potential to contribute to
a fast commercialization of electric cars in Sweden. More
information about the BeliEVe project can be found at
www.viktoria.se/projects/believe.
The concept of free-floating all-electric city cars is not
new. Viktoria Swedish ICT was looking into this concept
already in 2011, in a project called “Framtidens elbilspool
som lösning för personlig mobilitet i den hållbara staden”.
It should also be noted that free-floating carsharing
services using all-electric cars are already operating in
several cities; Car2Go for example offers this kind of
service in Amsterdam (Netherlands) and San Diego (US).
However, in Sweden there are no similar initiatives yet.
Within the BeliEVe project the free-floating all-electric
city cars business model has been further evaluated
towards the Swedish market. This has been made through
interviews with potential customers, representatives for
potential operators and potential key partners, creating
a greater understanding of the potential for this business
model in Sweden. The sensitivity analysis has also been
further developed based on the findings in the project.
SPONSORED BY:
VIKTORIA SWEDISH ICT AB
LINDHOLMSPIREN 3A, SE-41756 GÖTEBORG, SWEDEN
WWW.VIKTORIA.SE