Getting Car Share Policy Right: Lessons from Zipcar's UK Departure
Key Takeaways
- Zipcar's exit from the UK represents a policy failure, not a business model failure; car share works successfully in countries with better policy frameworks.
- Misaligned financial incentives are the core problem: councils lose parking revenue from car share, while the transport system benefits accrue elsewhere.
- Each car share vehicle typically enables 10-30 people to avoid car ownership, with members driving significantly less and using sustainable transport more.
- Good car share policy requires regional coordination and performance-based incentives that reward councils for car share success rather than penalising them financially.
- Car share should be more attractive than private car ownership but less attractive than public transport, walking, and cycling for trips where those modes are viable.
- Rapid electrification mandates may actually increase net carbon emissions by slowing car share growth and preventing more people from giving up private cars.
- Car share policy must integrate with broader transport, tax, and land use policies, including parking levies, road user charges, and development requirements.
- Equity concerns are valid but require comprehensive mobility solutions, not just isolated car share mandates in areas lacking good transport alternatives.
- The UK's experience offers a clear warning: fragmented governance, high fees, and lack of senior policy attention will kill car share systems.
- Jurisdictions must act now to reform their car share policies before they face similar collapses; the warning signs are already visible.
What Next?
Do you have an effective car share policy?
Introduction
Car share changed my life in London. For years, I lived without owning a car because I didn't need one. When I occasionally needed to drive, there was always a car available within a few minutes' walk. I saved thousands of pounds, drove far less, and relied on walking, cycling, and public transport for most of my trips. I became, unapologetically, a car share enthusiast.
So when Zipcar announced it was pulling out of the UK entirely, I felt the loss.
But I wasn't surprised.
As a Councillor in a London borough responsible for Transport and Strategic Planning, I saw the warning signs firsthand. I remember a particularly revealing conversation about expanding car share. The maths was uncomfortable: every new car share space we created meant more residents giving up their cars, which meant lower parking revenues, at precisely the time we were facing severe cuts to central government funding. The incentives were fundamentally broken.
We chose to expand car share anyway, becoming one of the highest-usage boroughs in London. But most councils didn't make that choice, and the consequences are now playing out in stark terms.
The numbers tell the story of this policy failure. Germany has 5.4 shared cars per 10,000 people. Belgium has 6.3. France has 2.1. The UK? Just 0.7, and Zipcar accounted for more than half of that figure.
This policy failure holds urgent lessons for cities around the world facing similar pressures.
In this blog, I'll explain why car share matters, what went wrong in the UK, and most importantly, what a good car share policy actually looks like, before more places lose this vital tool for better transport systems.
What went wrong?
Zipcar operated around 3,000 shared vehicles in the UK, serving 320,000 members. On paper, this looked like success. In reality, the company had been bleeding money for years, steadily retreating from cities across the UK. The final withdrawal was inevitable, just a matter of when, not if.
So what killed car share in the UK? Was the business model fundamentally flawed?
No. Car share works elsewhere. The problem was that UK policy created a perfect storm of obstacles that made profitable operation nearly impossible.
Problem 1: The Subsidy Advantage of Private Cars
We subsidise private car ownership extensively, free or cheap road use, heavily subsidised parking, and land use patterns that assume car ownership. These subsidies apply unevenly to car share. A resident might pay £63 per year for parking in Kensington and Chelsea, while a floating car share vehicle in the same area pays £1,110 annually, nearly 18 times more.
Car share wasn't competing on a level playing field.
Problem 2: Fragmented Governance
In London alone, car share policy fell under the jurisdiction of 33 different boroughs, each with slightly different regulations, processes, and requirements. For operators trying to achieve the density needed for a viable network, this fragmentation created enormous overhead, separate negotiations, different fee structures, and inconsistent rules.
Imagine trying to run a transport service where every few blocks, you enter a different regulatory regime.
Problem 3: Misaligned Financial Incentives
This was the killer. Local councils control on-street parking, which generates significant revenue. Car share directly threatens that revenue; every person who gives up their car is one less parking permit sold.
Councils faced a brutal trade-off: expand car share and watch revenues fall, or protect revenues by making car share economically unviable through high fees. With central government grants shrinking and budgets under severe pressure, many councils chose revenue protection.
The tragedy is that the benefits of car share, reduced congestion, lower emissions, better public health, accrue at the system level, while the costs hit council budgets directly. Without intervention to realign these incentives, the outcome was predictable.
Problem 4: The Well-Intentioned Burden
Many councils imposed additional requirements on car share operators with genuinely good intentions, particularly around fleet electrification. Electric vehicles are more expensive, and charging infrastructure adds complexity and cost. While the environmental goals were laudable, the pace of required electrification proved financially prohibitive, slowing growth.
Some research suggests that slower car share growth due to rapid electrification mandates actually increased net carbon emissions compared to faster growth with a mixed fleet, because fewer people had the opportunity to give up their cars.
Problem 5: Economic Headwinds
The UK's prolonged economic weakness, high inflation, and stagnant wages created a cost-of-living squeeze. For Zipcar, this translated directly into falling usage, members took fewer trips, reducing revenue even as fixed costs remained constant.
The Cumulative Effect
Individually, each of these problems was challenging. Together, they were lethal. High fees eroded margins. Fragmented regulation increased costs. Subsidised private car ownership made the value proposition harder to sell. Economic pressure reduced demand. And electrification requirements constrained growth.
Zipcar didn't fail because car share doesn't work. It failed because policy made it nearly impossible to succeed in the UK market. Similar challenges exist in other jurisdictions. The UK may be the canary in the coal mine.
Why Carshare?
If we're serious about moving away from car-dependent cities toward people-oriented transport systems, why should we support businesses that encourage people to drive?
It's a fair question, and it deserves a clear answer.
The Realistic Path Forward
First, let's be honest about the endpoint. Few people envision, or would accept, completely car-free cities. The goal isn't elimination; it's rebalancing. We want cities where most trips happen by walking, cycling, and public transport, with cars available when truly needed but not the default for every journey.
Car share is precisely designed for that world.
The Behavioural Shift
Car share is powerful because it doesn't just replace owned cars on a one-to-one basis. It fundamentally changes how people travel.
The research is remarkably consistent. When people join car share schemes, they drive significantly less and use public transport, walking, and cycling far more. The act of paying per trip rather than facing sunk costs makes people think differently about each journey. "Do I really need to drive for this, or could I take the bus?"
This isn't theory. Study after study shows the same pattern: car share members drive less than car owners, even when they have easy access to vehicles.
The Replacement Ratio
The numbers are striking. Each car in a car share scheme typically enables between 10 and 30 people to avoid car ownership. Even using conservative estimates of just five people per shared car, the impact on mode share is substantial.
The Supporting Infrastructure
Car share also creates a virtuous cycle with other sustainable transport. It works best where there's good public transport, safe cycling infrastructure, and walkable neighbourhoods, because those alternatives are what make giving up a car viable in the first place.
But the relationship runs both ways. Good public transport becomes more viable when car share helps people give up their cars. A household that relies on buses and bikes most of the time, with occasional car share for larger trips, validates the investment in those sustainable modes.
The Dual Benefits
Car share helps people in two crucial ways:
First, it prevents car purchases. Someone considering buying their first car might realise car share meets their occasional needs without the commitment and expense of ownership.
Second, it enables people to give up cars they already own, either their only car or a household's second vehicle.
Real-World Benefits
The cascade of benefits from increased car share adoption is significant:
- Less congestion as fewer cars compete for road space
- Lower air pollution and carbon emissions from reduced driving
- Healthier populations from more active transport
- Reduced household transport costs, freeing up money for other needs
- Safer streets with fewer vehicles
- More efficient use of urban space currently devoted to parking
The Strategic Value
Car share isn't the complete solution to car dependency. But it's a crucial enabler of mode shift. It provides the safety net that makes giving up a car psychologically and practically feasible; you can commit to sustainable transport for daily trips while knowing a car is available for that occasional countryside visit.
In the hierarchy of transport interventions, car share occupies a unique position. It's not as fundamental as good public transport or safe cycling infrastructure, but it's the bridge that helps people cross from car ownership to car-free or car-lite living.
If we're serious about reducing car dependency, car share is one of the most effective tools available, and critically, it is one of the few tools that doesn't face significant political obstacles.
Which makes the UK's policy failures all the more frustrating.
Why Was Not More Done To Support Carshare?
Given the clear benefits and the visible warning signs, why didn't UK policymakers do more to save car share?
The answer isn't conspiracy or incompetence. It's something more mundane and, in some ways, more frustrating: prioritisation.
The Tyranny of the Urgent
For transport agencies and political leaders, car share sits in an uncomfortable middle ground. It's important enough to merit attention but never urgent enough to demand it.
Because car share rarely reaches the top of the priority list, it typically gets delegated to relatively junior staff. These public servants might care deeply about the issue and understand its importance, but they lack the authority to resolve the fundamental policy challenges.
Fixing misaligned financial incentives between local and regional government? That requires senior leadership and political capital.
Reforming parking policy to favour car share over private vehicles? That's politically sensitive and needs executive backing.
Coordinating policy across dozens of separate jurisdictions? That demands high-level intervention.
Without senior attention, these structural problems remain unsolved.
The Feedback Loop
This creates a vicious cycle. Car share underperforms because of poor policy. The underperformance makes it seem less important. Its apparent lack of importance keeps it off the senior agenda. And so the policy problems persist.
Car Share Policy
Getting car share policy right requires addressing several interconnected challenges. Let me walk through the key considerations and what good policy actually looks like.
Place in the Transport Hierarchy
Where does car share sit in our transport hierarchy? The easy answers are clear: it's preferable to private car ownership and less desirable than walking and cycling.
The complicated question is its relationship with public transport.
Most hierarchies place public transport above car share, which seems obvious; public transport is more space-efficient and typically more energy-efficient per passenger.
But the relationship is more nuanced than a simple hierarchy suggests.
Car share depends on good public transport to work; people need alternatives to make giving up a car viable. But public transport also benefits from car share, it's easier to justify investment in bus and rail networks when car share helps reduce car ownership.
This raises a challenging question: if car share is powerful enough at enabling mode shift, should it be prioritised equally with public transport investment?
I honestly don't know the answer, and I'd love to see rigorous research comparing the mode shift impact per dollar invested in car share versus public transport expansion.
What I do know is this: our policy goal should be making car share more attractive than private car ownership while ensuring it remains less attractive than public transport for trips where public transport is viable. This principle should guide all our specific policy choices.
Governance: Aligning the Incentives
The UK's fundamental problem was a mismatch between where benefits accrue and where costs fall. The transport system gains from reduced car ownership, but local councils lose parking revenue and face administrative costs.
This misalignment is the root cause of the car share policy failure.
The Failed Model
Giving local councils complete control over car share in their jurisdictions creates predictable problems. Councils face direct financial pain (lost parking revenue) without capturing most of the benefits (system-wide congestion and emission reductions). Add their monopoly control over street parking, their own budget pressures, and the political sensitivity of charging residents more for parking, and you have a recipe for hostile policy.
The Wrong Solution
One option would be removing local control entirely, in London's case, transferring everything to Transport for London (TfL). This sounds appealing, but creates different problems. TfL would still need to work with councils to find street space, and a system that generates council resistance will struggle regardless of who formally controls it.
The Right Approach
We need strategic policy set at the regional level that harmonises the rules, reducing compliance overhead costs and actually incentivises councils to embrace car share. This requires solving the financial misalignment.
I'd propose two complementary measures:
1. Performance-based grant funding. Regional transport authorities should tie a portion of their annual grants to local councils to car share performance indicators. The better a council performs on car share metrics, the more funding they receive.
This offsets the parking revenue losses from successful car share while creating positive incentives for expansion. The specific financial mechanism will vary by jurisdiction depending on the existing relationship between regional and local government, but the principle holds: councils should benefit financially from car share success.
2. Usage-based fees. Instead of flat annual fees for car share spaces, councils could receive small per-use payments. Regional authorities should regulate these fees to prevent abuse of councils' monopoly position, but the principle creates the right incentive: the more successful a car share vehicle is, the more money the council makes.
This transforms the dynamic entirely. Rather than seeing car share as a threat to parking revenue, councils gain a direct stake in each vehicle's success.
Measuring Success
You can't manage what you don't measure. So what should we track?
The Primary Metric: Mode Shift
The key benefit of car share is the mode share change it creates: how much it shifts individuals away from car dependency toward walking, cycling, and public transport.
This isn't easy to measure. Tracking individuals raises privacy concerns and is operationally complex, but we should try.
The Operational Metrics
To improve overall mode shift, we need to track and optimise two operational dimensions:
Coverage: What percentage of residents live within reasonable walking distance (say, 250 metres) of a car share vehicle? Broader coverage means more people can realistically give up car ownership.
Utilisation: How often is each car share vehicle used? Higher utilisation suggests the service is meeting real needs and likely enabling more people to forego car ownership.
The Consequential Metrics
Mode shift should produce measurable outcomes:
- Reduced vehicle kilometres travelled
- Lower transport emissions
- Decreased congestion
- Fewer cars per household
- Improved road safety
- Reduced household transport costs
These can be tracked or estimated to validate that car share is delivering its intended benefits.
The Equity Question
Equity metrics deserve consideration, though I'll address the broader equity questions separately below.
Car Share Business Models
Currently, three main models exist:
Dedicated bays: Vehicles have specific parking spots where they must be picked up and returned.
Free-floating: Vehicles can be picked up and dropped anywhere within a defined zone.
Peer-to-peer: Private owners rent their cars to others.
An open question is whether these models produce different mode shift outcomes. Free-floating offers more convenience, does that reduce mode shift (because car use becomes easier) or increase it (because convenience helps more people give up ownership)? I haven't seen compelling data either way.
Given this uncertainty, policy should remain as neutral as possible between models. Let operators choose their approach based on what works in their market, and measure the actual mode shift outcomes rather than prejudging which model is superior.
The Impact of Autonomous Vehicles
We should anticipate disruption from autonomous vehicles. Imagine car share with driverless vehicles that come to your door and drop you anywhere before moving to the next user or returning to a charging hub. The convenience would be transformative, and parking bays would matter far less.
The critical unknown: does this level of convenience flip the mode shift equation? Could robo-car-share become so easy that people use it as much as they'd use an owned car, or even substitute it for public transport trips?
This question extends beyond today's car share policy challenges, but regulators need to be thinking about it now.
Market Structure
Policy shapes market structure, and we need to think carefully about what shape we want.
The Monopoly Risk
Governments could grant monopoly rights to a single provider across a region. Zipcar's collapse demonstrates the problem: putting all eggs in one basket leaves cities vulnerable when that operator fails.
The Free Market Chaos
At the other extreme, an unlimited free market where any operator can claim unlimited street space creates problems for street management and parking policy.
The Competitive Minimum
Car share benefits from local density; multiple vehicles in an area mean customers have alternatives if one isn't available. But customers also benefit from competition between operators offering different features, prices, and service quality.
This suggests dividing jurisdictions into zones with at least two competing operators in each. The challenge is deciding how to allocate these rights.
Outcome-Based Selection
While revenue-maximising auctions might seem attractive to councils, they'd increase costs relative to private car ownership and undermine car share's effectiveness.
Instead, consider outcome-based bidding: operators compete on commitments around coverage, availability, pricing, and predicted mode shift impact. The regional authority selects operators based on which proposals best serve transport objectives, not which pay the highest fees.
Contract Duration
Contract length matters enormously. Too short, and operators won't invest; the risk is too high. Too long, and underperforming operators remain entrenched.
Regional policy development should investigate the economics to determine optimal contract duration with performance review mechanisms.
Electrification Requirements
Fleet electrification has become a contentious issue. Councils with carbon reduction targets naturally want electric car share fleets. Operators also want to reduce emissions. So what's the problem?
Cost and pace.
Aggressive electrification mandates increase costs substantially. Vehicles are more expensive, charging infrastructure requires investment, and operational complexity increases. This slows growth.
My position: no mandatory electrification timelines. Maximise car share growth instead, which delivers greater short-term carbon reductions. Market forces and customer preference will drive electrification over time as costs fall and technology improves, without sacrificing the growth needed to achieve meaningful mode shift.
Equity, Community Service Obligations, and Subsidies
Should we require or subsidise car share in areas where it's not commercially viable?
The equity concern is real: for-profit operators avoid areas where economics don't work, often car-dependent suburbs with low density and poor public transport. If these areas are deprived, this can trap residents in expensive car dependency when car share might help them.
But here's my view: mandating or subsidising car share in these areas misses the bigger picture.
Car share requires good transport alternatives to work. Simply dropping car share into areas without good public transport, safe cycling infrastructure, and walkable destinations won't enable people to give up cars; it'll just create unused car share vehicles.
Equity in mobility needs a comprehensive approach: land use reform, public transport investment, walking and cycling infrastructure, and yes, car share as part of the package. But car share can't carry that burden alone.
Rather than community service obligations for car share, we need comprehensive mobility plans for underserved communities, of which car share might be one component.
Integration with Other Policies
Car share doesn't exist in isolation. It needs integration with broader policy frameworks.
Tax Policy Integration:
Vehicle registration taxes: Car share should receive at least equal treatment to private cars, if not preferential treatment. Some jurisdictions treat car share as commercial rentals and charge higher rates, exactly backward.
Parking levies: Where jurisdictions charge for off-street parking (a sensible policy), dedicated car share bays should be cheaper than private spaces. Given their mode shift impact, there's a strong case for making them free.
Car ownership subsidies: Governments subsidise private cars in numerous ways, tax benefits for novated leases, company car schemes, and more. Ideally, these subsidies should be eliminated. Short of that, car share companies shouldn't face worse treatment than private owners when purchasing vehicles.
Road user charges: Car share vehicles should still pay congestion charges; they're still cars with associated negative impacts. However, given their net benefits, there's a strong case for discounted rates compared to private vehicles.
Toll rebates: Some jurisdictions offer toll rebates for private vehicles but exclude car share. This is backward; rebates should be at least as generous for car share as for private cars.
Transport Policy Integration:
New property developments: Car share spaces in new developments can reduce parking requirements and traffic impacts. This should be encouraged, but policies must ensure these vehicles serve the wider community, not just development residents.
Intermodal integration and transport hubs: Car share works best as part of a mobility ecosystem. Strategic placement at transport hubs can provide last-mile solutions for train travellers who lack alternatives at their destination, enabling them to take the train instead of driving the entire journey.
The key is ensuring car share complements rather than replaces public transport and active travel for trips where those modes are viable.
Conclusion
Car share is an extremely valuable tool for achieving mode shift in our transport systems, delivering an array of benefits, including reduced congestion, lower emissions, healthier communities, and more affordable mobility options.
Yet despite this potential, car share policy consistently fails to receive the attention and strategic thinking it needs. The demise of Zipcar in the UK should serve as a wake-up call. This isn't just a British problem. The same policy failures that drove Zipcar out, misaligned financial incentives, fragmented governance, and insufficient integration with broader transport strategy, exist in other jurisdictions around the world.
We need governance structures that align local and regional incentives. We need pricing that makes car share more attractive than private car ownership. We need integration with wider transport and tax policies. And we need to measure success based on actual mode shift.
Will other cities and regions learn from the UK's mistakes before their own car share systems collapse? The canary has sung its warning. It's time to listen.