GM is shutting down its car-sharing service in eight cities to refocus on markets with the strongest demand (GM)

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GM revealed earlier this week that it’ll shut down its Maven car-sharing service in eight of the seventeen US cities it operates in over the coming months, according to TechCrunch. The eight cities reportedly includeChicago and Boston, though GM didn’t release the full list of cities it’ll cut. The automaker said that it "plans to focus on markets that have the strongest demand and growth potential," such as Detroit, Los Angeles, and Toronto.

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Here’s what it means: GM’s troubles with Maven make it thesecond US automaker to run into troubles with its mobility ventures, which suggests a troubling trend is emerging. Ford shut down Chariot, its shuttle-based ride-sharing service, earlier this year.

At the time, low demand — Chariot’s 25 vans in New York only served about five riders per vehicle per day — was believed to be the reason behind Ford’s decision. Ford had purchased Chariot in 2016 for $65 million, subsequently scaling it up to more than a dozen locations at its peak.

Automakers have struggled to move into lucrative mobility segments outside of traditional ride hailing.

The market for car-sharing services like Maven remains tiny relative to ride hailing. Global car-sharing revenues hit $2 billion in 2016 and will grow to $5 billion in 2030, according to AlixPartners estimates cited by The Wall Street Journal. In comparison, AlixPartners estimates that global ride-hailing revenues hit $36 billion in 2016 and will balloon to almost $300 billion in 2030. Automakers must fight for shares of the relatively small car-sharing revenue pool against startups with innovative brand reputations like Getaround and Turo.
As a result, profits have been elusive for automakers in the mobility space, something that’s tough to stomach given their investments in other areas such as electric and autonomous vehicle (AV) technologies.For example, Ford’s Mobility Services lost $674 million during all of last year, when Chariot was still active, and the company plans to spend $4 billion on AVs through 2023. For automakers that are allocating — and in many cases losing — billions of dollars developing electric and self-driving cars, large-scale mobility initiatives might not be a viable use of resources.

The bigger picture: Automakers’ mobility stumbles are prompting them to hone and consolidate their mobility efforts. When Ford shut down Chariot, it emphasized that it wasn’t abandoning mobility services altogether. GM appears to be following a similar approach by refocusing Maven in fewer cities.

As such, automakers’ lack of success in mobility shouldn’t be considered a failure, but rather an early misstep. We’ve already seen some players develop innovative approaches to the problem — for example, BMW and Daimler chose to pool their resources by merging their respective mobility services last year, creating a powerhouse across ride sharing, ride hailing, and car sharing. Ultimately, automakers may just need to experiment with different services and approaches before they can establish a sustainable mobility play.

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