238 daimler’s car2go business model Our fi nal example is still emerging as of this writing. Car2go is a new concept in mobility created by German vehicle manufacturer Daimler. Car2go provides an example of a busi- ness model innovation that complements the parent company’s core model of manu- facturing, selling, and fi nancing vehicles ranging from luxury cars to trucks and buses. Daimler’s core business generates annual revenue exceeding U.S. $136 billion through sales of more than two million vehicles. Car2go, on the other hand, is a startup business offering city dwellers mobility on demand using a citywide fl eet of smart cars ( smart is Daimler’s smallest and lowest-priced vehicle brand). The service is currently being tested in the German city of Ulm, one of Daimler’s key operational bases. The business model was developed by Daimler’s Business Innovation Department, which is tasked with developing new business ideas and supporting their implementation. Here’s how car2go works: a fl eet of smart “fortwo” two-person vehicles is made available throughout the city, serving as a vehicle pool accessible by customers at any time. Following a one-time registration process, customers can rent fortwo cars on the spot (or reserve them in advance) then use them for as long as they like. Once a trip is completed, the driver simply parks the car somewhere within the city limits. Rentals cost the equivalent $0.27 per minute, all-inclusive, or $14.15 per hour with a maximum of $70 per day. Customers pay monthly. The concept resembles popular car-sharing companies such as Zipcar in North America and the U.K. Distinctive char- acteristics of car2go include freedom from the obligation to use an assigned parking place, on-the-spot rental for as long as one likes, and a simple pricing structure. Daimler launched car2go in response to the accelerating global trend toward urbaniza- tion, and saw the service as an intriguing complement to its core business. As a pure service model, car2go naturally has completely different dynamics compared to Daim- ler’s traditional business, and revenues will likely remain comparatively small for some years. But Daimler clearly has high hopes for car2go over the long term. In the pilot phase, launched in October of 2008, 50 fortwo cars were made avail- able to some 500 employees of the Daimler Research Center in Ulm. These 500, plus 200 family members, participated as initial customers. The aim was to test the technical systems, gather data on user acceptance and behavior, and give the service an overall “road test.” In February 2009, the pilot was extended to include employees of Mercedes-Benz sales and service outlets and other Daimler subsidiaries, with the number of vehicles increased to 100. At the end of March, a public test was initiated with 200 vehicles and car2go was made available to all 120,000 of Ulm’s residents and visitors. At the same time, Daimler announced a U.S. pilot in Austin, Texas, a city with 750,000 residents. As in the fi rst phase of the German test, car2go will begin with a limited user group, such as city employees, then be opened to the public. These pilots can be seen as prototypes of a business model (see p. 160). Now, car2go’s business model prototype is being fi xed into organizational form. As of this writing, Daimler had not yet decided whether to internalize car2go or spin it off as a separate company. Daimler chose to start with business model design, then test the concept in the fi eld, and defer decisions regarding organizational structure until it could assess car2go’s relationship to its long-established core business. concept development internal pilot extended internal pilot ulm public pilot austin internal pilot austin public pilot which organizational form? Market introduction of car2go bmgen_final.indd 238 6/15/10 5:45 PM