Ridesharing Startups Lyft, Sidecar, And Uber Get The Green Light In California

September 20, 2013

A handful of trends have dramatically reshaped the auto industry over the past few years. Some, like hybrid and electric technology, are affecting the kinds of cars we drive, while others, like ridesharing, are having a more fundamental influence on our relationship with those vehicles.

Though electric cars score more headlines, ridesharing may be the more disruptive innovation, since it has huge potential to change the way we get around and diminishes our need to own a vehicle. Ridesharing has caused consternation in many areas, but according to Mashable, the state of California has just given it the green light.


As kids, most of us were taught that sharing is a good thing. As adults, we sometimes shed those altruistic inclinations (cf. yuppies, the 1980s), but today, sharing is again part of the zeitgeist, and for commuters, it's manifesting itself in two different but related ways:

Carsharing allows individuals (in the case of RelayRides) or a select group of car club members (in the case of Zipcar) to borrow vehicles quickly and easily. It's similar to renting a car from Hertz or Avis, but far less onerous and often much, much cheaper.

Ridesharing allows individuals to sign up for carpools (e.g. Zimride) or even work as de facto taxi drivers (e.g. Lyft). And real taxi drivers who want to earn a little extra business on the side can register with companies like Uber, which connects riders with nearby cabs and car services.

Carsharing has been fairly easy for government officials to understand. In terms of insurance, liability, and all the other associated logistics, it's not too different from car-renting.

Ridesharing, however, is a newer model, which makes it problematic. Sure, college bulletin boards have been around for decades, helping students split the cost of a ride home for the holidays. But the ability to contact a complete stranger and ask her to take you to work or Walgreens? That's a very different thing, and it's been the target of concerted advocacy campaigns in Dallas, Miami, and other major metro areas.

Los Angeles was one of those areas, and it issued cease-and-desist notices to Lyft, Sidecar, and Uber several years ago. However, it allowed the three organizations to continue operating while the state figured out how to deal with them -- specifically, how to address issues of insurance and safety. For example, unlike most cabs, few Lyft drivers have bulletproof glass separating them from passengers, not to mention all the other safety equipment, licenses, testing, training, ID badges, and insurance.

Now, however, the California Public Utilities Commission has unanimously voted to allow these services to operate at full speed. They'll fall under a new category for "Transportation Network Companies", and drivers will need to follow more stringent rules and regulations, like passing a criminal background check and taking special classes in driver training. Their cars will also have to undergo a rigorous, 19-point inspection. (A list of the new requirements can be found in this PDF.)

Which is great news for ridesharing companies, but it does lead us to wonder what effect it'll have on car sales in California -- not to mention what the next transportation disruptor might be.


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