Car-Sharing Startups Emerge From Pandemic With New Lease on Life
A pair of car-sharing companies that have outlasted more-established challengers and survived the pandemic are looking to bolster their balance sheets by tapping into Wall Street’s fascination with auto-related startups.
Much like Airbnb Inc. revolutionized the concept of overnight accommodations, peer-to-peer platforms create a market for car-sharing to link parked vehicles with those in need of a ride. The concept has been around for years: Two of the larger players, Getaround Inc. and Turo Inc., were both launched more than a decade ago and have become part of the growing mobility industry.
Neither startup owns any vehicles. Both rely on car owners who sign up with their online apps to supply them -- and sanitize them. Users tap their smartphones to unlock nearby vehicles that fit their budget and tastes for trips across town or the country.
Getaround has raised at least $839 million since its founding in 2009, according to PitchBook, including $140 millionas recently as October. It’s now considering a public listing as the pandemic wanes, to cash in on investor appetite for car-related startups. “Going public is one -- there’s many others,” Karim Bousta, Getaround’s chief executive officer, said of the company’s possibilities in an interview.
Turo, also established in 2009, has raised at least $496 million, according to PitchBook. It’s looking at “all options over the next few months,” Turo CEO Andre Haddad said in an interview.
The quest for new funding comes at a fortuitous time: Many auto-related enterprises have raised billions of dollars on the promise of their developing technologies. Startups ranging from vehicle data managers to parts makers and full-fledged electric-car manufacturers have benefited from an investment boom fueled by a rally over the past year in shares of EV-market leader Tesla Inc.
Demand for borrowed vehicles, meanwhile, plunged last year as people stayed home and shunned public transport to prevent the spread of Covid-19. Automakers such as General Motors Co., BMW AG and Daimler AG’s Mercedes-Benz abandoned car subscription services in early 2020, and rental-car giant Hertz Global Holdings Inc. filed for bankruptcy in May. Getaround and Turo took government loans to stay afloat.
It’s unclear if car sharing will fully recover even as people emerge from lockdowns and resume travel routines. But the two startups say business is recovering in step with the broader economy as workers return to offices and more vacationers book trips.
“As the most recent round of lockdowns has begun to subside, Getaround has already seen a 40% increase in weekly revenue since February,” said Bousta, a former Tesla employee who took over the CEO role in December 2020 as founder Sam Ziad became executive chairman.
Haddad said Turo has seen a “strong bounce back” and is confident rising vaccination rates will lead to more hustle and bustle.
Asad Hussain, a senior analyst at PitchBook, said car-sharing has been surprisingly resilient despite continued fears about exposure to Covid-19. “The industry is intact,” he said. “It’s definitely been hurt, but it’s rebounding.”
The two companies have taken aggressive steps to ease contagion concerns. Getaround waived cancellation fees, asked owners to keep hand sanitizer in their vehicles and adopted a quarantine protocol for cars that come into contact with people who test positive for Covid-19. Turo made cancellation policies more flexible, required disinfection of frequently touched hot spots and began promoting vehicles whose owners completed enhanced-cleaning training with purple handwashing-icon “badges.”
Turo host Bob Aiello manages a fleet of 33 cars, 19 of which are Tesla models, based in Jersey City, New Jersey, and has begun sanitizing cars with disinfectant wipes between renters. “If someone were really worried, we would ionize the car,” said Aiello.
Car-rental firms instituted similar cleanliness measures to attract customers to their captive vehicle fleets, but many were located around properties such as airports and hotels that suddenly became vacant as the pandemic spread. Now that demand is recovering, they are scrambling to rebuild diminished fleets amid a shortage of new and used vehicles due to automaker production cuts.
“Rental-car companies really struggled with changes in demand that didn’t really impact software providers -- person-to-person car sharing companies -- in the same way,” said Hussain. “The P2P car-sharing industry defied expectations when it came to the impacts from Covid.”