Zipcar (NYSE:ZIP) has launched its first large-scale electric vehicle (EV) program in Chicago. Electric Vehicles are a natural fit to car-sharing programs not just because of their eco-friendly nature, but also owing to the easy and cheaper access to adequate charging infrastructure, which has long been a hurdle in the popularity of EVs. Car-sharing programs opting for EVs would also benefit from government support for electric vehicles.
Zipcar is a membership-based car sharing company that serves over 673K members with a fleet of over 9K vehicles in North America and Europe. Aside from competing with traditional rental companies and car-sharing services like Connect by Hertz, Enterprise’s WeCar, UHaul’s UCarShare and City Car Share, it also faces competition from new low-cost, peer-to-peer (P2P) car sharing services like RelayRides and GetAround.
Chicago Going Green With Zipcar
Zipcar has launched its pilot Electric Vehicle program starting with five Chevrolet Volts in Chicago, and is expected to add another 20 EVs to its fleet this year. A Chevrolet Volt can travel gas-free up to 35 miles, after which it shifts a gas generator which produces electricity to keep it going an additional 375 miles on a full tank of gas. It thus offers Zipcar members the best of both worlds - low carbon experience of an electric car with the back-up security of a gas engine. Because several trips taken by Zipcar members are fewer than 35 miles, these trips taken in the Volts will be powered solely by electricity rather than fuel. The new Zipcar EVs will be placed in pods located throughout the city and will be available for reservation starting at $10 per hour.
Zipcar’s Electric Vehicle program also gets support of the Chicago Climate Action Plan. In 2012, the City of Chicago will install hundreds of electric vehicle charging stations for public use to help expand the EV infrastructure throughout the city.
In December 2011, Zipcar’s much smaller Chicago-based non-profit car-sharing competitor I-GO also launched a $2.5 million electric vehicle (EV) project for solar power based EVs. It added 36 all-electric vehicles to its fleet with 18 solar-powered charging stations to power those cars.
Electric Vehicles Make A Strong Case For Car-Sharing and Government Support
There is a natural fit for EVs in the car-sharing space as some people’s reasons for not owning a car is due to environmental harm. Electric vehicles are clean, green and quiet and are believed to be the best near-to-market low emission vehicle technology with no emissions at ‘point of use’, 30-40% lower CO2 emissions, and 60-70% lower fuel costs compared to petrol or diesel-fueled vehicles.
Electric vehicles are likely to be strongly leveraged by car sharing programs after 2012 and will create a strong case for government support for car sharing programs in Europe and North America.
Addressing The Need For Charging Infrastructure
So far, weak infrastructure and fewer number of charging stations have been a big hurdle to the popularity of electric cars. However, car-sharing programs make development of shared charging infrastructure easier.
Zipcar has been investing significantly in developing electric charging infrastructure and is likely to benefit from government support for electric vehicles. In Chicago, Zipcar is working with several partners like 350Green, which are installing EV charging stations for Zipcar EVs in various locations that include commercial and residential buildings, private parking lots and major travel routes.
The utilization of energy efficient vehicles like EVs also qualifies Zipcar to earn ‘Zero Emission Vehicle’ (ZEV) credits, and selling extra ZEVs under low-emission regulation laws generates supplementary income for Zipcar. In 2011-2009. it earned $3.4, $1.2 and $3.2 million, respectively, from selling some of its ZEV credits.
We have a $22 Trefis price estimate for Zipcar, which implies a premium of 50% to the current market price.