Car sharing switches to electric to boost appeal

Ieva Mackeviciute lives in Kaunas, Lithuania's second-largest city, but works in the capital, Vilnius. She takes a one-hour train ride to her company's Vilnius office each week and uses car-sharing services there to attend client meetings throughout the day. Through a mobile app, she can find the nearest available vehicle and drive it, paying by the minute, a method she finds both convenient and flexible.

Some car-sharing service providers even include parking fees in the price, and it's even better if she's driving an electric vehicle, as EVs can park for free around the city. "Being able to move quickly in a big city without having to worry about parking helps me have a more flexible schedule and better control of my time," says Mackeviciute, 30, who works in communications.

Despite her frequent use of car-sharing, Mackeviciute still owns a private car in Kaunas, which she often uses to visit family living in the countryside. Even when working in Vilnius, occasional car-sharing issues can disrupt Mackeviciute's day. "Sometimes it's hard to find a vehicle nearby," she says. "Sometimes, when you're in a hurry, the nearest vehicle may have not just one, but several maintenance indicator lights on. While I understand that fleet maintenance is a challenge, especially when the business is growing, it's still disappointing."

Regarding cars, most people feel similarly to Mackeviciute—they still want to own one. For example, in the UK, although 61% of people drive daily and 68% are concerned about rising car ownership costs, 78% are unaware of what car-sharing is, and less than 20% of Londoners would consider signing up for such a scheme. A report by car rental company SIXT shows that despite the presence of brands like Zipcar since 2000, industry data indicates that car-sharing remains a niche service.

The UK has only 2 million car-sharing users, while approximately 35 million people still own cars. Felicity Latcham, a partner at OC&C Strategy Consultants, explains: "Consumers are still accustomed to exclusive access to a car. The clear suspicion about whether a car-sharing option will be available whenever they need it, and concerns about hassle, are the biggest issues. This concern is even greater for families and older people, who particularly need to be able to leave items in the car."

But the increasing electrification of the car-sharing market may appeal to younger, more environmentally conscious drivers. A 2023 McKinsey survey of 4,000 people in the UK, France, and Germany showed that among Gen Z, 32% said they would like to use shared mobility schemes more to reduce their reliance on private cars. The survey also indicated that 50% of Gen Z want their next car to be fully electric.

The car-sharing industry is moving in this direction. Currently, nearly a quarter of European car-sharing companies offer 100% electric fleets. According to Statista, one-third of car-sharing vehicles in the EU are electric. Meanwhile, Zipcar doubled its electric fleet in the UK in 2023 and plans to go fully electric this year. Spark, the Lithuanian car-sharing company frequently used by Mackeviciute, launched in 2016 with an all-electric fleet.

Spark's recent performance is encouraging, with a 30% increase in its registered user base and an 11% increase in annual trips since 2022. Since last July, users of the Bolt ride-sharing app (the Baltic states' response to Uber) can now also book Spark vehicles. Spark founder Nerijus Dagilis believes that the increasing popularity of electric vehicles can attract more people to use car-sharing, especially with the support of the Vilnius city government, which, in addition to free parking for EVs, also allows them to drive in bus lanes.

Dagilis says: "Our customer base is increasing every month, which means we are creating certain value for people who prefer electric vehicles for sustainability reasons. For many, this is becoming a daily habit, especially for families—we are seeing more and more families reducing from two cars to one. The performance of electric vehicles is improving rapidly, so while there are still some doubts, once EVs can travel 500 kilometers on a single charge, I think people's anxiety will disappear."

Kite, based in Canada, is a car-sharing company with a difference. Not only is it all-electric, but it also partners with real estate developers to offer Kite cars to apartment building residents as an included service, or in the form of subsidized membership fees, similar to a gym or swimming pool. A Kite hub is typically installed on the ground floor of the building's underground parking garage, allowing residents to reserve their choice of up to 40 fully charged EVs. At some locations, Kite users can choose to return their car to a different building. Kite currently operates in 20 buildings across Canada and plans to add 70 more in the next 18 months, as well as adding properties in the US and Europe.

Kite founder Scott MacWillam says the convenience and savings they offer to prospective residents is an attraction. "More and more people are living busy urban lives, and they want a 'turnkey' lifestyle, which is a growing trend," MacWilliam says. "Real estate developers see this as a sales and marketing advantage. Residents can save money by giving up their private car, and this cost savings means they can now afford to live in the building, or even upgrade their apartment."

MacWilliam says Kite gives thousands of building residents the opportunity to try car-sharing and electric vehicles without any pressure or commitment, in an all-inclusive package—from charging and maintenance to insurance. Kite also hopes to install Kite hubs at train stations and introduce self-driving cars. "What I'm most excited about is that we can fundamentally change the way buildings are built, forever," he says.