Autos August 7, 2009, 1:28PM EST  - http://www.businessweek.com/print/globalbiz/content/aug2009/gb2009087_330677.htm

Autolib: Paris' Electric Car Sharing Plan

A plan to make 4,000 electric cars available for Parisians to pick up and drop off at rental stands still has some kinks to be worked out

By Leona Liu

Could the City of Lights soon become the City of Electric Cars? Paris Mayor Bertrand Delanoë, building on the success of the city's popular Vélib curbside bike rental scheme, is planning to deploy a fleet of 2,000 electric cars that customers can pick up and drop off at rental stands around the city. Another 2,000 vehicles will be offered in two dozen surrounding cities.

The green scheme, dubbed Autolib (short for "automobile" and "liberté"), is scheduled for launch as early as the end of 2010, although city officials say the startup date could be closer to mid-2011. Advocates say the system would reduce carbon dioxide emissions by 22,000 tons a year while improving traffic congestion as fewer Paris residents would need to own cars. It would be the first major city to offer such a service. "This could revolutionize transport," Delanoë told French radio station RMC when he first proposed the program in June 2008.

Now, after numerous delays, Autolib is finally going forward, with the formation this summer of an intergovernmental council for Greater Paris that will oversee the scheme. The city hasn't yet revealed how much Autolib is expected to cost, but French newspaper Le Parisien pegs the price tag at $14 million to build some 1,400 self-service rental and recharging stations around Paris and adjacent suburbs. The government for the French region that includes Paris, known as Île-de-France, will also reportedly contribute $4 million, according to daily paper Le Figaro. (Spokespeople for both government bodies would not confirm the figures.)

Bidding Companies

The program likely will be operated as a public-private partnership. A group including Avis (CAR) car rental, the French national railway company SNCF, and the Paris transit authority RATP has said it plans to bid on the initial contract. Rival bids are also being prepared by French utility group Veolia Environnement (VIE.PA) and by French public transport operator Transdev. The winning bidder not only will build the infrastructure but also operate the program—and be responsible for finding a manufacturer to supply the electric cars.

Several automakers, including Germany's Daimler (DAI) and France's Renault (RENA.PA) and PSA Peugeot Citroën (PEUP.PA), have expressed interest. "Nothing is for sure, but the Paris project is definitely interesting for Daimler," says Herbert Kohler, the company's chief environmental officer.

But getting those cars on the road may not be easy. Although several automakers are developing all-electric cars, none is yet mass-produced. Daimler has an experimental fleet of 100 battery-powered Smart cars being offered for monthly lease in London and expects to launch a similar program in Berlin by year's end. Nissan (NSANY) plans to introduce its first all-electric model in 2010, followed by Renault in 2011. Though it would be more economically feasible for Paris to buy a fleet of existing EV models rather than commission a new car specifically for the Autolib scheme, city hall says both options are being considered.

Autolib would operate on much the same basis as Paris' Vélib program, whose sleek gray rental bikes have become a common sight on city streets since its launch in 2007, and which has been widely copied around the world. Drivers will be able to pick up either a two-seat or four-seat car at any rental stand without a reservation by simply swiping a credit card in a reader. The car can then be dropped off at any stand when it's no longer needed. Although rates haven't been set yet, city officials say each half-hour is likely to cost $6 to $9.

Counting on Subscription Fees

Some 700 Autolib stands are to be built within Paris, including 500 curbside locations and another 200 in parking garages. Another 700 stands will be built in suburbs adjoining the city. Each stand will have recharging posts for the car batteries, which take six to eight hours to refill fully.

Customers would have to register for Autolib in advance, presenting a valid driver's license and paying a monthly subscription fee of about $22 to $29. Companies bidding for the Autolib contract are banking on these fees to turn a profit. "There is a very successful market out there today regarding short-term car rentals," says Laurent Salanie, marketing director for Avis France. "That's why we're so keen to do this project."

Paris officials say no other major city has attempted such a program, although a small-scale version has existed since 2007 in the city of Antibes on the French Riviera. The Antibes program has only 11 electric cars, all Maranello models made by Italian automaker Effedi. "Paris is proposing a massive project, which in my opinion is far too ambitious," says George Gallais, CEO of VuLog, a software company that pioneered Antibes' electric car sharing scheme, CitéVu, two years ago. "Electric cars are very fragile and expensive to maintain and repair. I don't know how Paris intends to keep 4,000 cars in good shape." Indeed, despite its popularity, the Vélib program has been plagued by vandalism and theft.

Push for Bikes Instead?

Another potential obstacle: surprising opposition from French environmentalists, including some political allies of Delanoë, who argue that Autolib cars could worsen congestion on Paris' already-crowded streets. Environmentalists favor ride-sharing programs or more traditional rental schemes in which cars have to be reserved and then returned to the same location, which discourages people from going for drives on a whim. "Encouraging the public to use any type of car instead of taking bikes or public transportation is a mistake," says Denis Baupin, a deputy mayor of Paris and a prominent Green Party leader.

Advocates of Autolib, however, contend that people will be less likely to buy cars if they have access to flexible, short-term rentals for grocery shopping and other errands that might be difficult to do using a bicycle or public transit. The cars will probably have a driving range of no more than 100 miles before needing a recharge, making them unsuitable for long trips. "It's a pain to own a car in Paris given how expensive and scarce parking is," says Stéphanie Véron, a spokesperson for Paris city hall. "Autolib offers a convenient and eco-friendly alternative."

Leona Liu is a reporter in BusinessWeek's Paris bureau.