Simpler regulations regarding car sharing can pave the way for sharing economy

Breaking ingrained patterns is a major factor in meeting the climate challenges of our time. And the easier the choices, the more people will make those choices to help achieve our climate goals. For instance, commercial car sharing simplifies opportunities for private individuals to rent out their cars. This has created smart conditions to use each vehicle more efficiently – instead of leaving it parked and unused.

But at the same time, there is another part of our fleet that could be an obvious part of today’s commercial car sharing. Around Sweden, there are organisations that need their company vehicles during the day on weekdays, but which then stand unused both evenings and weekends. These vehicles could theoretically ensure the availability of shared vehicles, give residents more reason to opt out of car ownership, and provide an important boost in the climate transition.

However, it is a solution that we do not yet see in the market to any significant extent. This is due to a complicated regulatory framework for professional car rental, which presents an administrative obstacle for property companies. Thomas Axelsson at Ezeride, a startup that develops mobility services, calls the current legislation outdated:

“In Sweden, we often talk about being pioneers and innovative, especially in mobility. But when it comes to this legislation, we first need to catch up with the rest of Europe before we can start talking about being at the forefront.”

Keen to investigate the effects of simplified regulations

Through the Vinnova-funded research project Drive Sweden Policy Lab, and with dispensation from the government, RISE wants to now investigate what simplified rules could entail for property companies and their tenants. In collaboration with Skövdebostäder and Ezeride, RISE has examined the various amendments required to implement the idea in practice. The idea is to follow the project over time to determine how everything works.

“This is a concept that hasn’t really been tested yet,” says Niklas Thidevall, legal expert at RISE. “We are now doing an experiment in a small, controlled environment, with reputable operators in a research project at RISE. If we come to the conclusion that this works very well, we have a strong argument for the government to address the legislation.”

Skövdebostäder constantly tries to find attractive solutions for its tenants, and one such solution is to offer car sharing. According to Lina Eklund Svensson, Head of Marketing and Development at Skövdebostäder, the approach to this particular experiment is especially interesting:

“I think there is greater flexibility as well as development opportunities in this solution. We can use vehicles we already have, and we see advantages in tenants also being able to share their own vehicles down the line. We will make our cars available in the evenings and on weekends, but you may need a car in the middle of the day.”

And with more cars available, it will be easier to reach the critical mass of vehicles that is frequently underscored as a prerequisite for people to eschew personal car ownership. A car must be available – whenever you need it.

“The argument for car sharing is that as long as there are enough cars available, people will trust that they will always be able to get hold of a car,” asserts Thidevall. “You want to be able to drive to the shops at short notice or take a child to the hospital, which means you don’t want to be without a car. So you get a car anyway. This model could be a key.”

Professional rental makes demands

If a private individual wants to rent out their car, there is no specific legislation that regulates this. However, when done commercially, as is the case with a landlord such as Skövdebostäder, it is covered by specific car rental laws. This means that you need to take a course, as well as have a permit, the requisite qualifications, and an appointed manager, and the cars must be registered as rental vehicles.

As a result, today’s regulations usually impose too high a threshold for those who want to try similar solutions.

“This means that you need to have made a full decision and undertake a long-term investment, when all you want to do is see if it works,” says Thidevall.

Has to support police work

As early as 2012, the Swedish Transport Agency requested that the current legislation be repealed. Despite this, the regulations are still in place, and according to Thidevall, there are basically two reasons why: 

“One is that you don’t want complicated conditions. The other is that law enforcement wants to be able to determine who has driven a certain vehicle. But the law has already been eclipsed in this regard. Criminals can turn to other private car sharing operators.”

Both Ezeride and Skövdebostäder further highlight that with the research project’s solution, it will probably be easier to find solutions that support the work of law enforcement.

“You have to respect the regulations and include all aspects,” says Eklund Svensson. “At the same time, private car rental is available today, and we can probably achieve better control, even though we do not have the training. Furthermore, our cars are clearly marked, which probably restricts those who want to remain completely anonymous.”

Since the solution is based on Ezeride’s platform Ezeride Share, Thomas Axelsson feels that it is a good basis for identifying other models for cooperation with law enforcement.

“No one wants to create a situation that impedes the police,” says Thidevall. “What we want to test, among other things, is whether the responsibility imposed on the lessor could be accepted by a reputable intermediary. And whether the lessor would be able to temporarily provide support in the form of extra vehicles. But current legislation does not allow for this, which is why we require dispensation to test.”

Behavioural changes with positive effects for the climate

Making use of cars that mostly stand idle is, of course, an obvious argument for a more sustainable society. But the experiment could also be a spark for something bigger. With different regulations – and if the model works – the experiment could ultimately help in more ways with climate transition.

“This is about creating behavioural changes,” says Eklund Svensson. “And if you can achieve this with vehicles, you may be able to apply the sharing economy in other areas as well.” Thidevall agrees:

“If you have the option of not owning a car and feel confident that you will always have access to a car in your home anyway, then maybe it will be easier to start sharing other things.” 

And while Eklund Svensson notes that there is not quite the same shortage of parking spaces as in the big cities, these challenges also exist in Skövde. With a reduced need for cars, property companies will not need to use as much land for parking spaces, and may eventually be able to build more homes instead.

“There is a lot of talk about providing charging stations, and this is something we, of course, must do,” explains Eklund Svensson. “But as a landlord, it is perhaps most important to focus on not needing to own a car at all. We must work to make it easy to not own car. Because sharing is more climate friendly.”

Thidevall also sees another possible effect – the financial benefit. If there is a reduced need for parking spaces and garage spaces per apartment, more newly built homes can instead generate greater profit for the property companies. And this may result in lower rental costs.

“There is much discussion in society that we need more homes with lower rents,” says Thidevall. “And something that eats into costs when building in densely populated cities is the need to build garages. If we can show that this type of car sharing works, the number of garage spaces could be halved. If so, the potential here is massive.”