Co-owning a Model S

Co-owning a Model S

I am developing a business model to enable more Tesla enthusiasts to enjoy driving a Model S. The way it works is that I purchase a MS and essentially rent it to 4 people, each taking their turn with the car for a week on a rotating 4 week basis. This would be a 36 month agreement- like a part-time lease. I am gauging interest in this approach. I invite replies as to whether people would pay in the range of $395 to $450 a month for this service (again, drive it basically 1 week of the month). The effective cost is more like $295 to $350 when considering the savings of not driving your primary vehicle for a given week. I may arrange for delivery and pick-up. Initial site is Phila area, but hope to expand to other regions if successful. Eager to hear thoughts. Thanks!

soma | July 19, 2013

bcorob | July 19, 2013

There's a reason arrangements like this are not popular. If the arrangement is only for one week a month, then each participant must still have a separate primary mode of transportation for the other 3 weeks of the month. That probably means an ICE vehicle which must still be paid for, insured, maintained, and parked/garaged all 4 weeks of the month. This other vehicle doesn't go away or stop depreciating one week every month just because the driver has access to a Model S. So each participant is now paying 100% of the cost of an ICE vehicle plus 25% of the cost of the Model S every month, regardless of the number of miles driven.

In addition to the costs, there are practical considerations for time-shared assets:

What happens when someone wants to go on road trip that extends past their week?
What happens when someone returns the car at the end of their week without charging it up?
What happens when someone changes jobs or moves away and no longer is willing/able to participate in the car-share?
What happens if one person puts excessive wear on the car (burning out tires, keeping battery at 100% SoC, etc.)?
What happens when someone is reckless with the car and damages/destroys it?

Sole ownership of an asset provides the right incentives for behavior - when a person bears the direct consequences of his actions, he is motivated to act responsibly. When the consequences are spread amongst a group, or worse, a 3rd party, there's no reason for a driver to treat the car any better than a rental. And there's plenty of reasons no one rents cars 1 week a month for 36 months at a time, regardless of the drive train.

blaquito | July 19, 2013

pricing seems high, can you brak that down more?

boomerdude | July 19, 2013

some fair points. And to reply to other comment- I thought about the Getaround/Relay Rides approach, but the demand on the East coast is more uncertain, and I can offer much lower rates per day of use than Getaround. Yes, this would be a second car for members, not their primary mode of transportation. There would be savings of gas and SOME depreciation for miles not driven (although time is also a factor). I think the biggest obstacle you mention is if a member moves out of the area. There would need to be an "out-clause" for this, with a minor penalty for ending the agreement early. People would be financially responsible for damage, and there would be full insurance.

Not for everyone, but I have to believe this is attractive to a number of folks, esp when considering that a MS commands up to $500+ per day for rental! For almost half that you can have the car for a week. Really just aimed at people who want the excitement of being able to regularly drive a MS without having to break the bank. Remember, these would not be Tesla owners otherwise, so it helps get more of these sweet EVs on the road.

Thanks for the candor, though. I hope to hear more feedback (esp positive!). I am testing the viability of this concept despite some challenges.

boomerdude | July 19, 2013

Blaquito- Thanks for the comment. Pricing adds up to about $1,600 for 4 members combined, which is only about $300 a month more than total operating cost, so not making big money here, but enough to perhaps make it worth the risk and hassle.

blaquito | July 19, 2013

pricing seems high, can you break that down more?

blaquito | July 19, 2013

sorry for the double comment.. i guess that's not too crazy. But i agree with bcorob, i don't know how it work. seems like there would need to be a lot of red tape and contracts and stuff.

bcorob | July 19, 2013

Some pay phones charge upwards of $3 a minute for a phone call. Some people might even pay those charges occasionally, because the phone is available right when and where they need it.

But that doesn't mean there is a market for a cell phone plan that costs $20 for one week a month, pre-purchased 36 months at a time. It doesn't matter that it's cheaper than 7 minutes on an expensive pay phone. There's just no market for that sort of usage. One fixed week a month means you have all the obligation of an ongoing ownership cost with none of the flexibility.

A better model might be a NetJets-like fractional-ownership structure. One company manages a fleet of jets and promises to make one available on demand for as long as you need it. As a customer, your membership purchases a fraction of an actual jet, and includes a base amount of hours per month. The company takes care of maintenance, scheduling, and ongoing costs.

But because you have to have inventory for peak demand (everyone wants to take it out on sunny holiday weekends), the costs per person would likely need to be much more than what you propose here. In an effort to bring down the total outlay, you've basically proposed a plan which achieves 100% utilization by pre-assigning each week to an owner. This model has seen some success in vacation timeshares, where customers often buy 1 week a year in perpetuity. But the difference is that vacation is an occasional need, so one week a year makes sense; and timeshare owners often have access to trade for a variety of other inventory that meets their occasional vacation time/place needs.

Your plan accounts for neither of these. I'm still baffled who is in the market for a car to use for one week a month.

boomerdude | July 20, 2013

Apparently nobody! Although I dont agree 100% with all of your comments, I appreciate your thoughtfulness. Thanks for taking the time to consider it. One test of the concept is whether I myself would pay that amount for to be able to drive the best car on the road 25% of the time. I can't say I'd jump on it immediately due to my financial obligations, but I would seriously consider it. I thought there would people with a little more disposable income that would love it, but the lack of positive feedback indicates that this may not be the case. If I do purchase a MS, I may go with RelayRides (Getaround)to defray some cost. To your point, there are probably a lot more people that would rent once or twice- maybe a lot of "try before your buy", etc.

JAFIC | July 20, 2013

hmm...the "rent and see how it fits you" plan/"REALLY extended test drive"

All good for visibility.

Not entirely sure for long term business model.

AlMc | July 20, 2013

I know this would not appeal to me. As has been suggested, a better way to defray cost might be to rent it out on a daily/weekend basis for longer test drives than would be available at your local store, King of Prussia.

Interesting premise though.

boomerdude | July 20, 2013

Thanks for comments

tobi_ger | July 20, 2013

Fyi: search the TMC forums for "car sharing" and you might see similar initiatives being mentioned or planned.

data02 | December 19, 2014

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Rolling Stone | December 19, 2014

I would go with four three month leases where the lessee controls the car for three months straight. Many less handoffs to worry about and that gives 9 straight months of ice time on another lease. Just a thought.

cquail | December 19, 2014

How would the insurance work? Three or four month lease would be more attractive to me.