ALL-ELECTRIC

CAR
SUBSCRIPTION
Car ownership is losing its value as status symbol. To an increasing number of people the car is just a
way to transport themselves between different locations. It is access to a car that is important, and
not ownership of one. As a consequence interest in different carsharing services and private leasing of
cars are rapidly accelerating.

All-electric cars have trouble attracting the mainstream car
customer. Very few have practical experience of all-electric
cars and it might also be difficult to compare the costs
of an all-electric car with the costs of a regular internal
combustion engine (ICE) car. The much higher purchase
price of the all-electric car might be compensated by the
relatively low operating costs, but uncertainties about life-
span of batteries and expected residual value makes the
calculation difficult.
Using all-electric cars in carsharing services means more
people gets the opportunity to form their own opinion
about electric cars. A positive experience from driving
an all-electric carsharing car might serve as a gateway to
getting an all-electric car of one’s own.
To achieve a competitive calculus for an all-electric car
it has to be used quite a lot. A suitable application area
for the all-electric car could hence be for commuting.
Combining the all-electric car’s suitability for commuting
with the positive effects that could be expected from using
electric cars in carsharing services has resulted in the all-
electric car subscription business model.
THIS IS HOW IT WORKS

The subscription includes all costs of the car, even
electricity (fuel). The subscriber does not have to worry
about services, reparations and maintenance of the car. If
the subscriber takes the car to the carwash, service garage
or equal, this is rewarded with a reduced subscription fee.
All-electric car subscribers also have full access to the
public carsharing service. This gives the subscribers easy
access to a conventional car when the all-electric car is not
sufficient, for example for longer trips. The subscriber pays
the ordinary carsharing service fee for using a conventional
car, but has no costs for the subscription during the time
and hence no double car costs occur. All car booking
is easily handled through an application available for
smartphones.
A positive effect of having subscribers commuting by
carsharing cars is that they at the same time are moving
cars to where the demand for cars is. During the days the
cars will be parked in areas where many people work, and
during the evenings and weekends the subscribers bring
the cars to suburbs and areas where many people live.
This movement of cars helps extending the market for the
carsharing service.

The all-electric car subscription offers access to a car
when you need one and when you don’t need the car,
regardless if it is during your workday, your vacation, or
something else, it will instead be available for others. This
way as a subscriber you’ll never have to pay for a car that
you don’t use.
The all-electric car subscription is a service offered by a
company also offering a public carsharing service. The
all-electric car subscription is though directed to people
who need access to a car more or less every day. Today’s
carsharing services are too expensive to be able to compete
with car ownership for these customers, but the all-electric
car subscription can offer a competitive alternative.
The customer defines the extent of their car access needs,
as well as when and where they need access to a car. The
subscription then includes access to a car at this agreed
level at a fixed monthly fee. If the subscriber needs to use
a car more than agreed in the contract, excess usage will be
charged corresponding to fees paid by regular carsharing
customers. When the subscriber has not booked the car it
is available for the regular carsharing customers.
The all-electric car subscription allows the subscriber to
use an all-electric car for commuting. Normal commuting
distances in Sweden allow the car to be used for more
than just commuting without need for more charging
than the ordinary overnight charge, and the all-electric car
subscription therefore also profits from making the cars
available for other customers while they are not used by the
commuter. When using the all-electric car for commuting
t is possible to keep it at home during the night and as long
as it is fully charged in the morning the subscriber does not
have to pay for the car during the night. If the customer
does not want to have the car parked at home it is also
possible to park it at one of the charging spots provided by Illustrations: Stefan Pihlgren
the service. Charging spots can be found centrally in the
city, close to large work sites, and in selected locations in
the suburbs.
BUSINESS MODEL IN DETAIL
In this section the all-electric car subscription is described based on the
business model canvas1 developed by Osterwalder et al.

CUSTOMER SEGMENTS CUSTOMER RELATIONSHIPS KEY RESOURCES KEY ACTIVITIES

The all-electric car subscription is primarily directed to customers
who today are car owners. They use their cars virtually every day
for commuting and to get to and from different recreational
activities. Typical customers live in a suburban area at a distance
of about 10 – 40 km from their work. Some customers have access
to two cars in their household.
Typical for the customers is that they do not think car ownership
is important. Still the car is a necessary tool in their everyday life.
They’re not interested in caring for and maintaining a car, they
simply want a car that does the job without hassle. Customers
also have some interest in environmental issues and values being
associated with services and products that have an environmental
friendly image. The target group is also to some extent prepared
to pay a little extra for perceived convenience, safety and flexibility
and would not chose a cheaper alternative if that would mean
more trouble for them.
The business model also includes a traditional carsharing service
directed towards customers of traditional carsharing services.
Customer relationships are mostly the same as
for public carsharing services today. Customers
are to some extent encouraged, but not obliged,
to take part in taking care of the cars by offering
fee reductions for customers who take the car to
the carwash or the car service station.
KEY PARTNERS
Close cooperation with a manufacturer of
all-electric cars could be advantageous. The
all-electric car subscription could serve as an
important marketing channel for the all-electric
cars, not least since they are driven by many
people. The marketing value could be enhanced
by parking places in strategic locations and by
painting and/or striping the cars.
Cooperation with different providers of parking
spaces and charging places, with utility companies
providing electricity for the all-electric cars
and with companies offering maintenance and
reparation of cars, will also be necessary.
The key resources in this business model are
the cars and the digital booking system, on
which the carsharing service is based.
DISTRIBUTION CHANNELS
Same as today’s public carsharing companies.
Most customer communication is handled
through the digital booking system that
can be easily accessed via an application for
smartphones or via web. Cars are available at
dedicated carsharing locations.
REVENUE STREAM
Incomes are generated from subscription fees
and from fees for traditional carsharing. Using
the cars for advertising purposes could probably
generate extra incomes.
The main activities in the all-electric car subscription
business model are the same as for other public carsharing
businesses; rental and maintenance of cars, both all-
electric and others.
VALUE PROPOSITION
The all-electric car subscription is a crossing of an
ordinary carsharing service and private leasing of an all-
electric car. How much the customer needs access to a car
and the customer’s driving pattern (which places he or
she is travelling between) determine where on the scale
between these different solutions the offered solution can
be found.

COST STRUCTURE
Cost structure is about the same as for a
traditional public carsharing company and largely
consists of leasing fees for cars, car maintenance,
insurance, maintenance of the digital booking
system, electricity and fuel for the cars and
marketing.

1
Available at http://www.businessmodelgeneration.com/downloads/business_model_canvas_poster.pdf (read 2013-09-03)
BUSINESS MODEL SENSITIVITIES
The business model is based on an assumption that
the subscriber will be prepared to pay a subscription fee
corresponding to what the cost would be for owning and
driving an equal ICE car. This assumption is justified by
that the subscriber, even though not having access to the
car full time, have access to the car when needed, and also
avoids responsibility for care and maintenance of the car.
Considering the low, and decreasing, fuel consumption
of many modern fuel-efficient cars it will be even more
difficult for the all-electric car to compete with ICE cars
in the future, unless fuel prices rise correspondingly. Rising
fuel prices as fuel consumption decrease are essential for
the competitiveness of all-electric cars, and hence for this
business model. Of equal importance is that price level of
electricity remains stable.
Occupancy rate of the cars are critical for the viability
of this business model. The low operating cost and high
purchase price of all-electric cars means that the more the
car is used, the better the viability.
The depreciation of the all-electric car is another critical
factor. The calculations for this business model assume
the residual value of the all-electric car to be zero when
the battery warranty expires. Since the car is so highly
utilized the mileage limit of the warranty is reached rather
soon. This severely limits the earning opportunities of
the business. If the battery warranty was extended, or if
it was concluded that the all-electric cars will normally be
functional even after the warranty has expired, it would
have a very positive impact on the viability of this business
model.
BUSINESS MODEL DEVELOPMENT
This business model is developed within the BeliEVe
project (Business model innovation for Electric Vehicles).
More information about the project can be found at www.
viktoria.se/projects/believe.
The idea about the all-electric car subscription is based
on the fact that very few people are interested in buying
electric cars. By offering the electric car by private lease
the influence of some of the factors that easily can scare
off customers from buying could be decreased. However,
the purchase price of a normal electric car today makes
the lease cost for such a car too high for the offer to be
attractive to a large group of customers.
When combining thoughts about private lease for all-
electric cars with the fact that an all-electric car has to
be used a lot to be profitable, an idea occurred about
facilitating for private leasers of all-electric cars to rent out
their cars when they’re not using them themselves. This
way rent incomes could cover parts of the cost for the car.
After discussions with representatives for the carsharing
business we came to see the benefits of using the privately
leased all-electric cars as additions in an already existing
public carsharing service. This way an existing customer
group could be utilized to create demand for these cars.
A number of interviews with potential customers have also
been completed during the development of this business
model. One thing that emerged from the interviews was
that the interviewees with experience from carsharing
services were less positive to renting their own car to
others than were the interviewees who had no experience
from using carsharing services, the interviewees feared
their cars would not be treated with proper respect. Some
of the interviewees also expressed a greater amount of
security about renting a car that belonged to and was
maintained by a company than about renting a car owned
and maintained by an individual.
Based on data from the interviews adjustments of the
business model were made. The offering now presented
has far more in common with a conventional carsharing
service than the original idea, which was more of an
extended private lease offer.
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