Paris Pulls Plug on Electric Car Service After Bike Debacle

(Bloomberg) -- Paris was a pacesetter in shared transport, launching Velib, the first large-scale urban bike share, in 2007 and an electric-car system called Autolib in 2011. Now, both ventures have skidded off course.

The city of Paris and other local governments on Thursday canceled their contract with Autolib's operator, Bollore SA, after the company predicted losses totaling 300 million euros ($348 million) over the next five years and asked for taxpayers to pick up much of the cost. Users also complained about dirty, poorly maintained cars.

Bollore, a French conglomerate that also manufactures Autolib's 4,000 electric minicars, still wants to find an agreement to keep the system operating, the company said in a statement late Thursday. The dispute could raise questions about the viability of car-share programs that Bollore supplies in several other cities, including Indianapolis, Los Angeles, and Singapore. A spokesman for Bollore said its car-share programs in other cities were functioning well and continuing to grow.

Velib has suffered an even more humbling fall. As recently as last year it was one of the world's biggest and most popular bike shares. With daily ridership topping 100,000, it inspired similar programs across Europe and the U.S. But with the operating contract held by French advertising giant JCDecaux SA expiring, local governments chose a new vendor, a startup called Smovengo that ran smaller bike-share systems in about two dozen European cities and promised more electric bikes and other innovations.

The new operator has struggled, though. By January Smovengo had managed to get fewer than 100 stations in operation around the city and suburbs, compared with 1,200 previously. The number has since increased to more than 700, but in the meantime dockless bike operators such Ofo and Mobike have moved aggressively into the city, often parking rows of cycles near empty Velib stands. Smovengo has blamed the delays on technical problems and on legal disputes with former operator JCDecaux. Smovengo declined to comment.

The woes of Autolib and Velib are a blow to Paris Mayor Anne Hidalgo, who has tried to tackle air pollution by encouraging people to use bikes and electric cars instead of gas- and diesel-powered vehicles.

The debacle also holds lessons for other cities, said Adam Cohen, a research associate at the Transportation Sustainability Research Center at the University of California in Berkeley.

Autolib, which lets users pick up and drop off electric cars at charging stations around the city, "is one of the most challenging models" for car sharing, Cohen said. Infrastructure costs are higher because electric vehicles require charging stations. With one-way rentals, such stations have to be built at multiple locations. And cars remain out of service for hours while being charged -- unlike conventional vehicles that can be rapidly hired out to other users.

“All of these things create a lot of financial strain on the system," Cohen said.

Autolib operator Bollore, owned by French billionaire Vincent Bollore, had asked local governments to help cover a projected 46-million-euro annual deficit until 2023 when its contract originally was set to expire. Paris officials pushed back, saying they had received inquiries from other automakers who could provide the service without subsidies. Among the companies expressing interest: Renault SA, PSA Group, BMW AG and Daimler AG.

It's unclear when the Autolib cars will disappear from Paris's streets. While Bollore said it hoped to still be able to find an agreement with the local governments, the city said discussions are under way with the company to determine a date to end the operation. Paris will seek to rapidly develop new car-sharing services and the city has had “very constructive discussions” with automakers, rental companies and startups in recent days, it said.

With Velib, the lesson is that governments should be cautious about making radical changes in a program that's working well.

Local governments “took a risk when they picked a company that offered many new technologies and that has never served such a big market," said Nicolas Louvet, who runs 6-t, a Paris consulting firm specializing in mobility. “Hopefully a year from now Velib will be operating just fine," he said, but in the meantime many Parisians will have bought their own bikes or turned to bike shares such as Ofo and Mobike, which are cheaper to operate because they don't have docking stations.

Since Friday, Parisians have another option to get around town: Google-backed sharing startup Lime deployed hundreds of electric kick scooters around the city. Their engines can run at up to 24 kilometers per hour (15 mph) -- except at night, when the scooters will be collected to avoid them piling up on the streets.

To contact the reporters on this story: Carol Matlack in Paris at cmatlack@bloomberg.net;Ania Nussbaum in Paris at anussbaum5@bloomberg.net

To contact the editors responsible for this story: Benedikt Kammel at bkammel@bloomberg.net, Phil Serafino, Tara Patel

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