Why Stellantis is focusing on vehicle sharing as other car makers pull back

Company could see new €2.8bn revenue stream separate from its low-margin, capital-intensive manufacturing business through its shared mobility arm

Stellantis agreed to buy Share Now, the car-sharing venture jointly owned by BMW and Mercedes-Benz, for an undisclosed sum. Reuters

In the car business, Carlos Tavares is seen as a turnaround whizz.

The chief executive of Stellantis, a self-described “performance psychopath”, bought Opel, the money-losing European operation of General Motors, and made it profitable in one year.

In 2021, Stellantis wowed Wall Street with an 11.8 per cent adjusted operating margin, while integrating a global mega-merger and navigating the chip shortage.

Earlier this week, the French-Italian-American conglomerate announced it was buying Share Now, the car-sharing venture jointly owned by BMW and Mercedes-Benz, for an undisclosed sum.

Car analyst Juergen Pieper estimates the price tag was about €250 million ($265m), based on estimated losses of €200m a year, as Bloomberg reported.

Car manufacturers’ track record in building new business models in the buzzy, ill-defined world of mobility is pretty grim. And the austerity brought on by the pandemic as well as the cost of transitioning to electric vehicles has forced many to cut their losses.

GM pulled the plug on its car-sharing unit, Maven, in 2020. Ford ended its dalliance with electric scooter-sharing service Spin, selling it off in March. There’s a long list of car subscription pilots that bit the dust: Cadillac Book, BMW Access, Mercedes Benz Collection, Audi SilverCar, Nissan Switch. Porsche’s subscription service, starting at $1,700 a month, however, is still growing.

So what is Mr Tavares thinking? I spoke with Brigitte Courtehoux, a 21-year veteran of PSA who’s now the chief executive of Free2Move, Stellantis’ mobility business, to better understand their strategy.

Free2Move has been at this since 2016 and it’s learnt from its mistakes along the way, Ms Courtehoux said.

A key downfall for car-sharing and subscription services has been the cost of maintaining and servicing vehicles as well as exposure to the car’s depreciation as an asset. For car makers used to booking revenue once a vehicle leaves the factory, it’s been a painful lesson.

With Free2Move, Stellantis avoids those costs.

“We don’t own the cars, we don’t want to own the cars,” Ms Courtehoux said. The app gives users what she calls a “seamless experience” that allows Free2Move to have “more customers, more revenues, and reduce our risk in terms of assets”.

The Free2Move app connects users to cars they can rent for a few minutes, hours or days. Most transactions come from rental car companies, which pay a fee for the referral.

Another business bucket is dealers operating a fleet rental business — the dealers service the cars and eat the depreciation.

Free2Move manages its own car-sharing service in select cities where there’s enough utilisation to cover costs. Even then, it leases the vehicles from banks, which take on the depreciation risk, Ms Courtehoux said.

So far, Free2Move has about 460,000 cars in operation in Europe and the US; once the acquisition of Share Now is complete, it should have 5.4 million users. And Free2Move turned a profit last year on revenue of €40m, Ms Courtehoux said.

There are about 13.7 million users of car-sharing apps in the US and Europe, excluding peer-to-peer platforms like Turo or Getaround, says Shwetha Surender, an analyst at Frost & Sullivan.

If Ms Courtehoux succeeds, she could deliver on a piece of the car maker’s ambitious strategic plan for 2030: a new €2.8 billion revenue stream separate from the low-margin, capital-intensive manufacturing business that Wall Street pooh-poohs.

It could also provide the company with a network to send out autonomous vehicles, something it’s already talking about with its self-driving partner, Waymo, Ms Courtehoux said.