RelayRides ditches gas cards

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Updated: As I wrote in a report for GigaOM Pro on The Economics of Peer-to-Peer Car Sharing (subscription required), making money off of building a network for neighbors to share their cars can be a difficult business — there’s the insurance, the IT costs, and the marketing to get customers. And that’s  all for a startup to bear. But at least one cost, startup RelayRides says it will no longer cover: the cost of gas in the reservation price.

In a note to customers this week RelayRides says starting on January 16th it will no longer include gas in the reservation price of the car and car renters will have to fill up the gas in the car to where it was before they started the reservation. Car owners are supposed to keep the cars at least half full with gas before they rent them out.

The gas cards that are currently being used in the cars will be deactivated and removed, RelayRides says. And because filling up gas for very short trips could be pretty inconvenient for renters, RelayRides says for short trips, renters can email RelayRides the dollar amount to cover the gas that they estimate they used.

Essentially RelayRides is distributing the cost of gas across the car owners and users. The key to making margins in the peer-to-peer car sharing business will be to keep the various costs as low as possible, so its likely a smart move. Though, we’ll see if the decision alienates any customers, who now have to take on more costs themselves.

Update: RelayRides founder Shelby Clark tells me that previously the car owner paid for gas, but that RelayRides wanted to switch the financial responsibility for the cost of gas from the owner borrower to the borrower owner. “This is an effort to make things more equitable for everyone,” says Clark.

Covering the cost of gas is something that car sharing leader Zipcar does, and I’ve long wondered if the price of gas rises substantially will that be a sustainable model for them. The folks at car rental company Enterprise told me as much in an interview earlier this year, and sited paying for gas as one of the reasons they weren’t quite ready to be in the car sharing business yet in any meaningful way.

RelayRides also seems to have higher costs than its competitor Getaround, in terms of installing the IT system. RelayRides sends out a technician to install the locking/unlocking and remote disconnect system, while Getaround sends a kit out to its users for them to install the device themselves.

At least a dozen companies have emerged in recent years across the globe looking to create peer-to-peer car sharing networks. The trend is based around people in urban areas not wanting to own a car but being able to rent out a car close by on demand. At the same time people that own cars in urban areas can maximize the use of the car and make money in the process. I like car sharing because it uses transportation more efficiently and cuts down on fuel used and miles driven.

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