- General Motors’ Chevrolet Bolt EV plugin concept car appears to be the first vehicle designed specifically for ride-sharing.
- Many of the Bolt’s features appear to be tailored for drivers with ridesharing apps, such as Uber, Lyft and Sidecar.
- Ridesharing is a growing industry; Uber is now valued at $41.2 billion.
- GM is already participating in and profiting from Uber’s financing plan for drivers.
- The technology in the Bolt could be adapted to other models and applied to other markets, such as same day delivery.
The most interesting and exciting aspect of General Motors’ (NYSE: GM) Chevy Bolt EV electric car is that it seems to be the first vehicle designed for the ridesharing industry. That could put GM in a position to become a dominant player in a growing and potentially lucrative segment of the auto market.
When General Motors executives unveiled the Bolt to the press at the 2015 Detroit Auto Show on Jan. 12, 2015, they mentioned a number of features that sound as if they were designed for drivers with ride-sharing apps, such as Uber and Lyft. These features included:
- A 200-mile range on a charge of electricity. That would be about enough juice for a day of driving around town looking for fares.
- An integrated ride-sharing management application, according to The Verge.
- A self-parking capability to make it easy to park in the city, where most ridesharing drivers operate.
- An ability to use a smartphone app as a “key” to the car, meaning it can be integrated with a smartphone.
- The Bolt could have a next generation cruise control that keeps it from getting too close to other vehicles and causing accidents.
- A flat battery pack, which makes for a roomy interior that can comfortably fit four adults.
- A hatchback to make it easy to load and unload luggage, packages or groceries.
- The ability to choose driving modes, vehicle ride height and suspension tuning.
- A $30,000 to $40,000 price range. Note: The $30,000 price that GM CEO Mary Barra mentioned at the Detroit Auto Show is apparently based upon a $7,500 federal tax credit for electric vehicles. That would make the price around $38,000.
The Bolt’s features seem to be designed to address some of the problems that ridesharing drivers face, the biggest of which is controlling costs, including fuel costs.
Why Ridesharing Drivers Could Go Electric before Everybody Else
Unlike traditional taxi drivers, persons working with ridesharing services like privately held Uber Technologies Inc., Lyft and Sidecar have to pay for their own car, fuel and insurance. To make matters worse, Uber also takes 20% of what drivers earn as a fee for its services to them. Drivers also face falling levels of payment; Uber just cut its rates and payments to drivers in the U.S. by 10% to 25%, according to the Ridesharing Guy Blog.
Ridesharing drivers, like other businesspeople, need to keep operating costs as low as possible, which is why many of them drive hybrids. The numbers indicate that a ridesharing driver could save a lot of money by going electric. The average price of a kilowatt hour of electricity in the United States was around 12.58¢ in October 2014, according to the US Energy Information Agency, or EIA. The average price of a gallon of gas in the USA was $2.139 a gallon on Jan. 12, 2015, according to the EIA. The average price of a gallon of diesel fuel in the U.S. was $3.05 on the same day.
Based on those prices, it would cost around $28 to fill the tank of a small car such as a Toyota Corolla with gasoline. The Corolla’s tank holds around 13.2 gallons of gas, according to the fueleconomy.gov website. It would cost around $44 to fill the tank of a diesel-burning car such as the 2015 Volkswagen Jetta TDI Clean Diesel. Unfortunately, fueleconomy.gov did not say how much it costs to charge an electric car such as the Tesla Model S, the only comparable vehicle to the Bolt currently on the road. Fueleconomy.gov did say that the annual fuel cost for a Model S was $700 and that a driver would save $3,250 over five years when compared with the average vehicle’s fuel costs. Fueleconomy.gov estimated that the average yearly fuel cost for a 2015 Corolla was around $1,000 and $1,250 for the diesel Jetta.
These figures indicate that an electric vehicle could increase a ridesharing driver’s profits if its overall cost was comparable to a gasoline or diesel car’s. The base price of the 2015 Toyota Corolla is $16,900 (the average one costs around $19,000), and the base price of 2015 Jetta TDI clean diesel is around $21,640. The base price of a Jetta Hybrid is around $27,645. The base price of Toyota’s Camry Hybrid is around $26,790, and the base price of a 2015 Prius is around $24,200.
That means GM will have to get the base price of an electric vehicle down to around $25,000 to be competitive in the ridesharing market. If it did that, General Motors could become the market leader based on fuel economy alone.
Uber Could Be GM’s Future
The ridesharing industry is growing quickly, although it is hard to get accurate numbers because the main players are privately held; however, Uber claimed it was providing one million rides a day in December, Forbes reported.
Uber is now valued at $42.1 billion and generates hundreds of millions a year in revenue, according to The Wall Street Journal. Uber also claims it will generate $2 billion in revenue by next year. Uber is currently operating in 26 countries and expanding aggressively. The Journal also estimated that Uber’s valuation grew by 126% in just six months. Uber has demonstrated an impressive ability to attract private equity funding. Uber’s main competitor, Lyft, is currently operating in 64 U.S. cities.
General Motors is already working closely with Uber. GM is one of three companies that take part in Uber’s financing program for drivers. The other two are Ford Motor Company (NYSE: F) and Toyota (NYSE: TM), neither of which is currently offering an electric. In Uber’s program, the car payments are deducted directly from the driver’s earnings, which allows GM, Ford and Toyota to profit directly from Uber’s expansion.
General Motors and Google Inc. (NASDAQ: GOOG) are also experimenting on next generation ridesharing technologies utilizing electric cars. A pilot project at a Google campus in Mountain View, California, combines Chevy’s Spark electric cars and sensor technology designed to make parking more efficient. An article on the project in Green Car Reports does not say if any Google software is being used in the effort.
The technology in the Bolt could easily be applied to other vehicles used by ridesharing drivers; for example, Cadillac sedans, limousines or SUVs driven by the higher end Uber Black drivers and vans or minivans. Minivans would be ideal for shopping trips or moving several people around a city at once.
Bolt Ideal for Delivery
The vans or minivans or the Bolt itself—if the back seat was removed—could then be used in another next generation application for automobiles: same-day delivery. Amazon.com (NASDAQ: AMZN), Google Inc. (NASDAQ: GOOG), Uber, Kroger (NYSE: KR) and Wal-Mart Stores Inc. (NYSE: WMT) are among the large companies experimenting with same-day delivery options.
With its 200-mile range, small size, self-parking capabilities and hatchback design, the Bolt could be ideal for same-day delivery in a crowded city. An electric-powered minivan with similar features to the Bolt could be a money maker in the delivery market. That market could be huge; Google’s Shopping Express has 37 merchant partners, including Costco and Walgreen, and it is now available in the San Francisco Bay Area, New York, Los Angeles, Chicago and Washington, DC.
Many of the same-day delivery business models use drivers that are independent contractors, much like Uber does. Uber is also experimenting with moving, delivery and courier services, which could be a further source of customers for General Motors.
With the Bolt, General Motors has not only demonstrated it can quickly adapt new technologies but the old-line automaker is also showing an impressive ability to identify markets like ridesharing and capitalize upon them.