With rising populations and widespread urbanisation, the number of cars on the street continues to grow. New problems bring about creative solutions and we are seeing a shift in how people think of mobility – namely, the move from ownership to usership – and changing how they get around. We have entered the era of shared mobility in full force and everyone seems to be talking about ridesharing, ridehailing and carsharing. With all of these terms being thrown around, it is easy to get confused with the differences between each of them, so here’s a quick breakdown of what is what.
Ridehailing is simply, as the name suggests, to independently arrange for a ride. The customer can request a journey from a pool of on-demand vehicles and be driven by an unlicensed taxi service. Companies that provide these services, such as Uber and Lyft, have risen in popularity over the last few years and become one of the main ways of getting around.
These companies employ locals under their trusted platforms, to drive individuals to their destination using their personal cars. This service is typically app-based and everything is handled from a single touchpoint. During the registration process, the user adds their payment information to their account, so all bookings are paid for directly within the app, eliminating any cash exchange. To book a trip, the user simply needs to specify their destination and the app tracks their original location to ensure a seamless pick up. Likewise, the user can track the driver and even request particular drivers and vehicles based on real-time information and ratings.
Ridehailing is essentially a “modern-take” on traditional taxi services, that benefit from cheaper fares due to different regulatory systems, as well as a streamlined service that is convenient, practical and immediate. This has made it a very popular mobility solution, clearly demonstrated by the 15 per cent growth rate across Europe, amounting to just over seven million euros in revenue in 2019 alone and an overall staggering 138 million euros worldwide. Although it seems like a relatively new service, ridehailing has actually provided millions of affordable rides for over 10 years.
Ridesharing follows the same principle as ridehailing, but with a twist – the rides are shared with other customers travelling in the same direction. Companies, such as Moia and ioki, allow customers to share their journeys and consequently the fares. Customers book a journey via the app and drivers pick up additional passengers on the same route, comparable to a bus or shuttle service, but with flexible stops decided by the users. The pricing works on the basis of the number of passengers, meaning that the more people sharing a ride, the less an individual user needs to pay for their trip.
Another notable difference between ridesharing and ridehailing, is that drivers are generally employed by a provider. But there is another famous example of long-distance transport which also counts as ridesharing. Users of blablacar, for example, offer to take other passengers with them travelling to the same destination. Sharing the ride lowers the overall costs and CO2 emissions and adds a sociable element to the journey for users making long trips. It’s important to note that the charged prices shouldn’t be higher than the operating costs of the car, otherwise the driver requires a license for passenger transport.
When it comes to carsharing, there are many service providers and different models out there. Simply put, it’s a concept for short period car rental that falls into one of three sharing models: free-floating, station based or peer-to-peer.
Registered users can unlock a carsharing vehicle anywhere within a service area – oftentimes limited to city borders – and park it anywhere within that area once they have reached their destination. Most providers work with a pay-by-the-minute model, so that users pay for the exact time that they have used the car. There is no need to reserve in advance, but some concepts offer this possibility. These app-based carsharing services such as DriveNow and car2go, which now operate under the joint venture “SHARE NOW”, show all available vehicles on a virtual map based on the user’s location.
Free-floating carsharing services are by far the most popular offering of this sort. In Germany, there are roughly 220 users per free-floating vehicle, in comparison to 58 per station-based vehicle. This practical and easy to use service enjoys a good reputation – in 2019, Germany saw a user growth of 16 per cent, a figure that is reflected across other European countries, highlighting the willingness towards the model of usership. By 2025, usership is predicted to increase exponentially, to a forecasted 36 million users worldwide.
A station-based carsharing concept works similarly to the free-floating one but, as the name implies, is based at a specific station. There are designated stations across the service area of a provider where the driver can pick up and return the rented car. Stationary carsharing companies are available all across Europe, such as Ubeeqo, Cambio and Greenwheels. Several cities also offer carsharing services linked to public and regional transportation, offering car rentals directly from train stations. In Germany, the national rail service Deutsche Bahn, offers this with its Flinkster carsharing option. Although stationary providers lack the flexibility of the free-floating carsharing model, they cater to a different user needs with a greater selection of vehicle choice and longer rental options.
Peer-to-peer (P2P) carsharing allows individuals to lease their cars when they are not using it. Similar to business models that allow users to rent out their homes, there are also several platforms where users can find and rent out privately-owned vehicles in their area, such as Amovens, Drivy and GetAround. This tends to work out cheaper than other carsharing concepts, but it is worth noting that the person putting the car up for hire is the primary decision maker in terms of when the car is available, making it a less flexible model for the user.
The benefits of shared mobility
Besides the environmental aspects, there are several reasons to use shared mobility concepts. Cost and fuel savings make up the biggest motivation for consumers to choose these services. Not having to look for available parking, in the case of ridehailing and ridesharing, is also an attractive feature for users. But the benefits also extend into social behaviours. With greater awareness of environmental responsibility, customers are open to models of usership and sharing rides also offer up the added benefit of networking on the way to your destination – that’s business in our era.