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Shared economy to drive car-sharing business

A key word for the Chinese car industry in 2016 would definitely be shared economy.

Take the car hailing service industry as an example. Creating hundreds of thousands of jobs and offering hundreds of millions of rides nationwide, the industry witnessed a boom and then a reshuffle marked by Didi Chuxing’s acquisition of Uber’s China operations. The mobility industry is being reshaped.

After the end of money burning war in the car hailing service industry, hot money flew to another area: bike sharing, as Mobike and ofo became household names overnight.

With the help of continuous huge investments, the bike sharing business has successfully expanded to many cities. Now in many tier-1 to -3 cities, one can easily spot lines of orange or yellow bikes by the roadside. Fetch, use and return DIY with dirt-cheap prices. The last kilometer mobility headache finally gets solved.

In contrast to the heat of car hailing service industry and shared bike business, car sharing or hourly car rental business has not had the same traction after several years of market cultivation.

Brands like car2go, car2share, Panda, TOGO, EVCARD, Soda, EZZY, Yidu and LeShare have swarmed the market place.

Policies to keep fewer cars on the road, high cost of buying a car and maintaining it, limited parking spaces… these all contribute to people’s interest in the car sharing business, according to Wang Yang, founder and CEO of Yidu.

Wang’s company has put some 300 units of BAIC BJEV’s EVs in some 200 outlets, with one or two vehicles at each outlet on average, but too little during rush hour. Yido’s survey says Beijing alone needs 10,000 cars dedicated to car sharing. But the company can only expand its fleet to some 1,000 units by yearend.

Industry analysts believe high cost, quota restriction and policies have affected the industry greatly.

A Mobike bicycle costs around ¥3,000 ($436), while that for an ofo bike is much lower. But for the shared car business, it is entirely another issue. To help users fetch and return cars nearby, a vast service net must be built. The huge spending can only be afforded by the shared car service provider. Last year Beijing only released some 20,000 NEV license quotas, far less than what the rental market needed.

Car purchase cost, parking fee, electricity fare, car repair costs are also major costs for a shared car.

Though with such difficulties, Wang expects explosive growth of the business in the next five years. His company has already replicated its model in Guangzhou and Taiyuan, Shanxi Province, and proved to be effective.

More capital are likely to be poured into the business and help build the shared economy and it would be interesting to see how these different platforms can be interconnected rather than just operate independently on their own.

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