“It is kind of crazy that the Trump campaign was in contact with Russia when the Hillary campaign wasn’t even in contact with Michigan. It’s a direct flight; it’s so close.” – Michelle Wolf speaking at the Correspondents’ dinner April 28, 2018

In the upcoming U.S. elections there will be a lot of talk of so-called “battleground” states – Pennsylvania, Michigan, Wisconsin. These are states that could turn the tide in the election in either direction. In the car sharing industry we have one comparable battleground state – Germany – with some emerging candidates such as Madrid and Los Angeles.

One of the first casualties in the emerging car sharing war came in Berlin (and Hamburg and Munich) as Oply surrendered this week with a forlorn missive to its members. “Dear Oply customers” the parting note begins auf Deutsch translated here, “It is with a heavy heart that I have to inform you today that Oply will cease operations on 27 February 2020.

“Despite the very high demand (thank you for that!) and very good growth figures, we could not close a new financing round in a difficult investment environment for sharing offers.”

Difficult indeed. Some car makers are pulling back. Rental car companies are pushing in. Startups are on the menu. (Volkswagen has plans for 8,400 WeShare shared cars in Europe following a relatively small scale Berlin launch. Rental car giant SIXT has 2,000 shared cars on the street with plans for thousands more. And Yandex has announced plans for its Western European market entry - with thousands more shared cars likely to follow.)

Quoth Oply: “The Sharing Economy is going through difficult times. Many car manufacturers have withdrawn from the sector or significantly reduced their investments in order to concentrate on their core business - car production. In addition, significant waves of layoffs at well-known companies in the Sharing Economy, both in Europe and in the USA, have made the headlines in recent months. This flood of negative headlines has enormously clouded the investment climate in the sharing environment. Unfortunately, we had to realize this painfully with Oply.”

Oply and its investors no doubt saw the writing on the wall. In a capital intensive sector such as car sharing – where a third or more of the necessary investment goes to support the vehicles on the street – high rates of utilization are necessary. The only way to drive high rates of utilization are to leverage existing infrastructure such as rental car, dealer, or ride hailing operations.

It appears that Oply was focused solely on the B2C value proposition and leisure-oriented usage. Successful car sharing operators are increasingly enabling their vehicles to be used by ride hailing drivers or for longer-term rentals or as dealer loaner vehicles. Many of the dozens of operators in Germany – which is in many ways the epicenter of the global car sharing phenomenon – are similarly B2C-oriented – setting the stage for a massive industry consolidation in an investment environment allergic to high costs of operation, steep losses, and slow growth. Oply may be the car sharing industry's equivalent of the canary in a coal mine - alerting startups that the financial oxygen is insufficient to survive.

Says Oply: “I very much regret that your neighbor on wheels will no longer be able to contribute to relieving the burden on private transport in the future. I am still convinced that a model like Oply will help to reduce the number of private cars in our crowded cities and relieve the roads and the environment. I also firmly believe that sooner or later, shared mobility will prevail in metropolitan areas. And in order to ensure that new mobility offers can be operated sustainably in our cities, politicians also need to create a legal framework that offers planning security. But this is a topic in itself.”

We all want car sharing to work. We all want effective and efficient business models that allow for seamless mobility solutions. But we must be realistic that car sharing must “fit” into existing business models and leverage real consumer or business requirements.

Oply: “Dear neighbours, I would like to thank you from the bottom of my heart: for your loyalty, your feedback, your countless positive and constructive comments, your pictures and stories and for your enthusiasm! Oply could only become so successful with you and it makes me personally proud and grateful that we could give you a little bit of freedom and independence from the private car. I hope you will find this freedom in other mobility models and remain true to the idea of sharing - for our cities, for our environment and simply for yourself.”

Couldn’t have said it better. Car sharing operators – and ride hailing operators as well – want to release us all from car ownership. But high utilization is essential and no amount of regulation or legislation can drive demand. Clever operators have to leverage existing transportation models and, even then, better have deep pockets.