GM opens up OnStar with peer-to-peer car sharing service

The around 6 million subscribers to GM’s OnStar connected car service can now rent out their cars to other drivers via a deal between the auto giant and peer-to-peer car sharing startup RelayRides. The partnership was announced back in October of last year, and the service is live as of Tuesday.

RelayRides — which raised money from GM’s venture arm — says it is the first third party to use OnStar’s API, and later this Summer GM plans to open up the API to other third party developers, too. OnStar uses satellite-connected on-board units to offer connected services, but the primary application to date has been to summon help in the case of an accident or other emergency. GM offers the service to car buyers free for a few months to try out before initiating a monthly fee — the service can cost $200 to $300 per year — and is looking to offer more services to retain those trial customers.

Using the OnStar system, RelayRides members can use a mobile app to reserve a car and unlock and lock the door. Owners of the vehicles can earn money from renting out their cars, and set the price for how much they want their cars to be rented. Depending on the location of where the car is parked, car owners can earn hundred of dollars per month, says RelayRides.

RelayRides, which first launched in the Summer of 2010, has been building a network of car owners and drivers interested in using cars a service. For much of the time, RelayRides has been installing a communications device in the vehicles to facilitate the reservation process, which can be a somewhat expensive and labor-intensive process. But in the GM cars, the OnStar system acts as that control gadget. RelayRides also won’t be installing communication devices in its customer’s cars in the future, but will use a combination of the OnStar system and will facilitate key sharing for non-OnStar subscribers.

RelayRides isn’t the only peer-to-peer car sharing company out there. Getaround, which sells a kit to its car owner customers, and Wheelz, which has an investment from Zipcar are two other ones. The service can be envisioned as sort of “car sharing 2.0″, in contrast to traditional car sharing networks like Zipcar and CityCarShare, where the organization owns the fleet of cars.

One of the major hurdles with these services is security. HiGear, a high-end luxury peer-to-peer car sharing company was the target of thieves and shut down. Investor Sunil Paul backed away from his idea to launch peer-to-peer car sharing via a startup called Spride Share because of his concerns over insurance and the business model. RelayRides says the OnStar system makes its peer-to-peer service more secure, as the OnStar vehicles can be controlled and tracked in the network.

Auto makers have an interesting relationship with car sharing. Car sharing has been proven to lead to fewer cars being purchased, so in a small part, car sharing is cannibalizing the auto maker’s business. But a variety of automakers are realizing they can benefit from car sharing in various ways, including getting their cars in front of the young and urban who normally wouldn’t be test driving their cars. Other companies, like Daimler, and Volkswagen, are trialling their own car sharing pilots.

RelayRides is backed by over $13 million in venture funding from investors including Google Ventures, August Capital, Shasta Ventures and General Motors Ventures.

Source : GigaOM