Ford, Chariot Team Up For Shared-Van Service in Austin

Ford thinks there are too many single-passenger cars in the world. Who knew?

byNeal Pollack| PUBLISHED Dec 15, 2016 12:04 PM
Ford, Chariot Team Up For Shared-Van Service in Austin

In one of the weirdest transit developments I can recall, the city of Austin, Texas, has partnered with the Ford Motor Company to run an inexpensive, app-based van service along major commuter routes. The service is called Chariot. It will either be remembered as a product that changed mobility forever, or as “that time Ford tried to get into the bus business.”

Last week, Chariot launched in Austin, making the Texas capital its second market, after San Francisco. I met up with Chariot’s CEO, Ali Vahabzadeh, at a bar downtown, where Chariot employees were encouraging Austin yuppies to put down the free sliders and download the Chariot app onto their Androids. Vahabzadeh told me that he’d grown up in New York City, and had lived his entire adult life in London and San Francisco. Therefore, rare among American bipeds, he’s never owned a car.

Living in Brooklyn, Vahabzadeh encountered a phenomenon called the “dollar van,” where entrepreneurial types cruise the boulevards, looking for people who have been waiting too long for a bus or a cab. For a buck or two, they’ll drive you a few blocks. Meanwhile, traveling the world working for Bank Of America, he realized there were similar services in Tel Aviv, in Latin America, all across Asia—basically everywhere but in the United States. That became the basis of a business plan.

He cobbled together a fleet of old Ford Econoline vans with 100,000-plus miles on them, connected them to an app-based route system, and ran them up and down popular Bay Area routes. The trips cost $4 or $5, proving so popular that companies began offering Chariot memberships in employee benefit packages. The hospitality industry, which was having trouble getting employees to and from work in an impossibly expensive city, crowdsourced a “last mile” route between a BART station and Fisherman’s Wharf. Chariot racked up thousands of subscribers. Corporations took notice.

Vahabzadeh says he met with a Japanese company and a German company. But Ford won out. “When I met Bill Ford,” he said, “the first thing out of his mouth was ‘there are too many single-occupant vehicles in the world.’”

Wait, the Ford Motor Company, which brought motoring to the American masses more than 100 years ago, says there are too many cars? Could this possibly be right? To find out, I called Ford Motor Company, and spoke with Jessica Robinson, Director Of City Solutions for Ford’s Smart Mobility Program. She confirmed that, yes, that’s company policy now.

“As we think about cities of the future, we want to participate in that bigger story and want to be a mobility company as well,” Robinson told me. “We want to bring a world-class service to people who might not want to own a car.”

Austin makes for a particularly pungent laboratory in this very odd paradigm shift. Voters here committed transit seppuku last year by deciding to approve harsh restrictions on Uber and Lyft drivers, causing the ride-sharing companies to make good on their baby-ish threats to leave town. It left the city with a massive transit gap unique to a quasi-metropolis. “As a city,” Robinson said, “Austin is naturally interesting to Ford. It has painful congestion problems.”

To his credit, the city’s Mayor, Steve Adler, has tried to use Austin’s painful congestion problems as an opportunity to innovate. With the city’s backing, Google’s self-driving car company Waymo has been doing driverless runs through the suburbs. Adler backed the launch of a non-profit city-funded ridesharing app, Ride Austin, that hasn’t been a total botch, and has encouraged a competitive ride-sharing ecosystem where there are now nine companies, with 9,000 drivers, competing for customers. When Uber and Lyft inevitably return, they will find themselves struggling for market share.

They’ll also apparently be competing with Chariot. The private van service is now running two commuter-hour routes down major Austin thoroughfares. Chariot memberships will cost $119 a month, which isn’t cheap, but it’s still less than the monthly cost of owning a car. Whole Foods, headquartered in Austin, has added Chariot membership to employee benefit packages, allowing them to travel the mile and a half from the nearest train station to the corporate offices at 6th and Lamar. It’s a corporate vision of a public good.

“If a few dozen companies do this, you suddenly have private enterprises creating a public good at no expense to the taxpayers,” Vahabzadeh told me. “If you’re doing it right, you can change meaningful habits of a lot of people.” When I asked, “what about people who don’t have yuppie corporate jobs?” he offered up the idea of cities subsidizing the rides of low-income residents. This seems like a nice progressive goal, though it does knock the “no expense to the taxpayers” argument out of the box.

The politics have yet to be sorted, but this doesn’t feel fly-by-night. Even though Chariot is energetically a startup, it’s also a corporate product. Ford is providing a fleet of brand-new transit vans. Drivers are paid W2 employees, and will get health insurance starting in January, though Vahabzadeh told me that Chariot plans to offer a $3 fare by 2018 and wants to go fully autonomous by 2021.

In other words, there’s a long-term plan in place. Chariot intends to launch in eight more cities worldwide in the next year and a half. “We want to be the Amazon of transit,” Vahabzadeh said. “Unlike Uber and Lyft, which are losing millions of dollars, Ford’s not in this to lose money. They want to make a profit.”

For now, though, the service is free in Austin until after the New Year. A company spokesman, in response to request for stats, said, “we haven't ever disclosed specifics around rider numbers, but I can confirm we've seen hundreds of downloads of the app in week one in Austin.”

That’s not exactly the harbinger of a revolution. Chariot’s—and Austin’s—promises of a Central Texas transit utopia will have to play out over time. I can safely report that, as of this afternoon, traffic downtown is still really bad.