The Failure of Curbside Car Rentals

Why this Business Model fails again and again in the US

GIG Rental Car demo, photo by the Author

Curbside car rental has long been pitched as a seamless solution: cars available right on the street, bookable by the hour or day, with no need for a trip to an airport counter or suburban lot. In theory, it should be a natural fit for modern urban mobility. In practice, the U.S. has been a graveyard for these ventures. Companies rise with venture capital, pilot in a few cities, and quietly fold. The reasons are not cultural quirks alone but structural and economic realities baked into America’s transportation ecosystem.

Getaround announced back in February of this year that it was suddenly shutting down its US operations, due to an ongoing lack of liquidity (it ran out of money). Despite various restructuring attempts and moves to streamline operations, Getaround concluded that U.S. operations were no longer viable.

Likewise, Gig Car Share, a service launched by AAA’s innovation arm (A3 Ventures), announced that it would cease operations late last year. Gig operated in the Bay Area (Oakland, Berkeley, San Francisco), Seattle, and previously Sacramento. The reasons cited were “decreased demand, rising operational costs, and changes in consumer commuting patterns.”

Unlike Europe or Asia, where compact and inexpensive vehicles dominate the streets, the U.S. car market is skewed toward SUVs, trucks, and mid-sized sedans and crossovers. Even at the fleet-purchasing level, cars cost more to acquire and maintain. That upfront burden immediately tilts the economics against short-term rentals.

Curbside car rentals thrive in dense, walkable cities where residents don’t already own cars and where demand is steady within a few blocks. But American cities are sprawling, and outside of a handful of urban cores (like in New York, San Francisco, Boston, and Chicago) most areas lack the population density to justify curbside fleets. Without density, utilization rates plummet and every idle vehicle bleeds cash.

The U.S. also has some of the highest auto insurance costs in the world. Companies offering curbside rentals are on the hook for expensive commercial insurance policies. Add to this America’s tort-heavy legal environment, where lawsuits after accidents are common and settlements costly. In countries with universal healthcare, medical costs after crashes are at least partially socialized. In the U.S., those costs are fully borne by insurers, and ultimately by the rental company.

In Asia or Europe, fleets can be stocked with tiny, fuel-efficient or electric cars that are inexpensive to buy, insure, and operate. The U.S. market doesn’t favor many of these small models on the road, and the smallest of which are banned from operating on public roads in most states. Without a supply of low-cost, durable cars, every American curbside fleet is built on vehicles too large is just too expensive for the economics to work.

Operators in Europe have leaned on small electric cars for their fleets. But in the U.S., public charging infrastructure remains spotty, especially at the curb. Without a dense web of fast chargers, EV-based curbside fleets require expensive workarounds, manually relocating cars, that erase the cost advantages of electrification.

Curbside rentals only work if the cars are clean, fueled, and ready to go. In some dense European or Asian cities, companies can potentially contract with small local vendors who can provide cleaning, fueling, or charging on the fly. In the U.S., labor costs are significantly higher, and the lack of density makes the economics of mobile service businesses difficult. Every car needs a longer, more expensive turnaround or is neglected making the user experience suffer with dirty vehicles.

Even if a company can solve all of the above, another hurdle is municipal permitting. To legally occupy public curb space, companies must negotiate with city governments, often paying high annual fees per vehicle. In cities already strapped for parking, curb space is extremely politically sensitive. The cost of securing those spots can eclipse any potential profits.

The final nail in the coffin was post covid habits, so many marginal drivers went out a bought cars after lockdown, removing the largest consumer base for temporary hourly rentals.

Curbside rental can thrive in other countries because cars are cheaper, denser cities sustain higher utilization, healthcare costs aren’t privatized, and regulations allow fleets of small vehicles. In the U.S., by contrast, every structural factor stacks against the model. It’s not just bad management or poor execution, it’s systemic. Until American cities densify, healthcare costs come under control, and the regulatory framework shifts to allow cheaper vehicles and curb space, curbside car rental will continue to fail in the U.S. No amount of venture capital or slick app design can bend those underlying economics.

And all of this is moot with the current rise of autonomous cars anyways. When your car can drive to you, and then to your destination, it ultimately solves the same problem, that is unless they run into the same cost issues.