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Driving And Thriving: Steer Offers e-Mobility On Demand

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If you’ve been watching the growth of the electric vehicle (EV) market, two facts stand out: the technology is advancing so quickly that buyers risk obsolescence, which makes some potential buyers hesitate to ante up; and second, EVs are truly a superior technology when compared to the internal combustion vehicle.  

So – on society’s march towards a more sustainable energy economy - how might we better take advantage of the fact that EVs boast superior performance and are gentler on the environment, while neutralizing concerns about obsolescence?  Executives at Steer (a subsidiary of energy holding company Exelon) believe the answer to that is relatively simple: offer consumers a subscription service that removes risk while creating a better driving experience.  

Nobody would buy an iPhone for a decade, so why an EV?

Co-founders CEO Sonya Harbaugh (a former close colleague of mine in the Demand Response group at Constellation Energy) and COO Erica Tsypin (a seasoned professional with experience in all things e-mobility at Chicago utility ComEd) have created a start-up that offers a monthly, risk-free, concierge subscription e-mobility service.  This offers the customer the opportunity to swap multiple vehicles without the hassles of ownership.

Harbaugh uses the analogy of the iPhone, and observes that the average American driver today keeps a car for 10-12 years, and asks rhetorically, “Imagine if you had to keep your iPhone for 10 to 12 years.  Who would want that?”  She points to the example of the Nissan Leaf: The first version offered 84 miles of range, while five years later, the new Leaf has now been restyled with nearly twice the range and a lower sticker price. 

Many of the early EV buying pioneers – the ones now with arrows in their backs – are sitting on obsolete vehicles and terrible resale values (a quick search on CarGurus in Massachusetts reveals a 2016 Leaf with an original MSRP of $32,000 and just over 5,000 miles for sale at $11,500).  Nobody needs that experience, so instead of buying – or even leasing - says Harbaugh, why not subscribe instead?

Monthly subscription packages remove risk and jack up convenience

Tsypin highlights the two main value propositions of Steer’s offering: the first is the “hassle-free” aspect and total convenience.   The second is that “it’s risk-free EV driving.  The service is all-inclusive with one monthly fee…Just like we get clothes in a box and movies on demand conveniently tailored to our lives… All of the plans come with insurance, repairs and maintenance.  We handle everything when something goes wrong.  If you have a fender bender, we show up with a new car. There’s no insurance claims adjustor, no waiting on repairs, no fighting for a rental car.”

The way the program works is pretty simple (as long as one has some discretionary income): the customer can choose one of three packages (as outlined on the company’s website): For $889/month plus a one-time activation fee (and tax) a customer can sign up for the “Practical Advantage Plan,” facilitating access to vehicles such as the Nissan Leaf, BMW i3, Toyota RAV4 Hybrid or Prius Prime (plug-in hybrid).  It includes two swaps each month, with the cars delivered to your door.

If you just want access to the Tesla Model 3, there’s also a plan for you at $1,089/month plus the activation fee.  No swaps are involved (so you can’t go from a black car to a red one?), but for $50 drivers can swap into a car from  the Practical Plan – for example if one needs an SUV for the weekend, or something with more space and seatbelts.  

And if you simply must have luxury and top-of-the-line performance, you can pony up $1,689 a month to access an unlimited number of swaps among the hottest EVs out in the market, including the Porsche Panamera, Jaguar i-Pace, the Tesla Models X and S, Audi e-trons and BMW’s X5.  

Harbaugh and Tsypin indicate that a good deal of time and effort went into developing the various packages, with focus groups and in-market testing to determine levels of interest, desired car selection and price points.  

For many subscribers, convenience and flexibility is the game changer, Harbaugh says, though some are motivated by the fact that the vehicles are environmentally friendlier.  Then there’s the high-end group of car enthusiasts who enjoy access to luxury brands and performance vehicles “without shelling out six figures.  They are delighted to swap between  a plug-in Porsche Panamera, a Tesla or a Jaguar iPace…they love the idea of a different brand (sedans and SUVs) for a different moment.”  

As far as the actual mechanics of swapping, Harbaugh says, “It’s not a model where you can see a list. It’s more of a matching model, where you tell us what kind of driving you plan to do – commuting, road trips with family, a date night out,  and then we match the right car to ‘fit’ your needs. We also consider if members are ready for all-electric driving or prefer to dip their toes into EVs with a hybrid. If you tell us you’re going to take road trip 400 of miles versus a 40-mile trip, it’s a different use case.”

The on-ramp to the electric driving experience 

Tsypin observes that they have seen interesting behavior as customers navigate among the 16 different makes and models in Steer’s portfolio.  “In one plan,” she comments, “we have people who almost never swap. In another plan you have majority of members swapping a couple times a month.  It’s been really interesting to see behaviors play out.” 

For many subscribers, the experience has provided an on-ramp to the EV experience, precisely because its month-to-month commitment offers relatively low-risk.  Fully 70% of Steer’s customers are new to electric vehicles, and many live in apartments and condominiums where they may have limited access to on-site charging.

A large number of these customers never swap, Harbaugh indicates.  In some cases, they may not be comfortable with an all-electric model, perhaps owing to concerns with range, but they want to get started, “so the option of the Toyota Prius Prime or RAV 4 Hybrid is appealing.  Then maybe they go with the Hyundai Kona and its 250 miles of range.” 

For many people, obviously, the concept of paying over $800 per month is a bit steep.  Harbaugh acknowledges that not everybody can afford that kind of price for mobility, but points out that most potential customers start off the conversation by comparing apples to oranges, perhaps looking at just the monthly car payment or lease fee rather than considering the full cost of ownership including local excise taxes, depreciation, insurance, maintenance, repairs, and inconvenience of down-time, visits to repair shops, and the car-buying experience itself.  “We often have to spend time educating people; and tell them what’s included at least 2 or 3 times…Then people go ‘oh wait a minute, I have an oil change, I have new tires coming up.’ Most people have never calculated how much it really costs to drive their car.”

Subscribers do have to pay for their own charging, but Steer has also taken pains to make this easier as well. With a SteerPass (which gives universal access to EVGo and ChargePoint networks) members get hassle-free access to public charging infrastructure, so customers don’t have to download any more apps or create additional accounts.

So how does Steer get customers to give them a try? How does the company even create awareness in the first place?  Most marketing takes place through digital and social media platforms like Facebook and Instagram, Harbaugh says, but asserts that “the best way is still putting people in the car, putting butts in seats.  They see it drives better, it’s faster, and more like an iPhone.”  Then the company uses social media to highlight the experience.  “You see lots of delivery photos on our social,” she says.

Limited to DC today, but coming to a highway near you

Currently, Steer’s service is limited to the Washington DC area, which was chosen for a variety of factors including the demographics and charging infrastructure.   The notion was that if it could succeed on the East Coast, it would likely play well in other markets.  Thus far, from admittedly small (and undisclosed) early numbers, Harbaugh indicates the company is seeing rapid monthly growth and very low churn at only about 3%. “Some want to try before they buy so they can get the experience,” she says “and then many end up staying.”

With all of those models and choices the company keeps a ‘reserve margin’ of extra vehicles to accommodate swaps, which represents overhead.  As the company gets bigger, better, and more efficient, the goal is to continue optimizing the inventory so that it can give every customer what he or she wants.

Future plans include moving into other regions and numerous potential partnerships.  “Subscription is the jumping off point for us,” Harbaugh states.  “We see we can have a much bigger impact on electrification.”  For example, she cites the telematics that are in each vehicle.  “We know where EVs are driving, what kind of cars people want, and how they (the models) compete with one another.”  That information could be valuable to automakers, to utilities, and to city planners.  Harbaugh comments that the company has been approached by a number of municipalities and utilities, asking about the ability to support fleets, and when they plan to expand to additional locations.   

“We get lots of calls. The basic questions are always, ‘what is the subscription fee and what kinds of cars do you offer?’ The next question is ‘When are you coming to our state or city?’… Personal car ownership is ripe for disruption.  Everything else in your life is on-demand.  70% of our members are new to EVs – this is not the early adopter crowd – its just regular people, ready to make a change.”

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