For riders who don’t mind their transportation served up with “a word from our sponsor,” a newly expanded downtown San Diego circulator service will kick off this spring with a price that’s right: free.
Civic San Diego, the city’s downtown project oversight agency, is finalizing details for a service that will use electric vehicles — big enough for five passengers and a driver — to transport riders among all of downtown’s neighborhoods within the city’s designated parking district.
Starting with 20 vehicles — which officials said could be expanded to 50 in coming years — the service by Florida-based The Free Ride makes use of advertising-wrapped vehicles that can be hailed the old-fashioned way from the street, or through a mobile app currently being developed by Free Ride.
While the company generally has seen its highest ridership within the 22-to-40 age group in the markets that it serves, Free Ride co-founder Alex Esposito said the customer base can be much more diverse depending on the location, especially in urban areas.
“We’ve had tourists ride us, we’ve had local office workers riding, we’ve had seniors who live in the area and they’re picking up groceries,” he said.
Esposito started the company in 2011 with co-founder James Mirras with a similar but smaller-scale service in the Hamptons area of New York’s Long Island.
The company has since expanded to West Palm Beach, Fla., as well as Santa Monica. The new San Diego offering, expected to start in April or May, is an extension of a service that Free Ride started last summer during Comic-Con International, which still has five to seven vehicles operating downtown depending on demand.
The same company, operating locally as San Diego Free Ride, has previously done event-oriented shuttles using electric vehicles in the Hillcrest neighborhood, and most recently had the cars operating during the San Diego Chargers’ 2015 home games, shuttling visitors between their vehicles and stadium gates in the vast parking lot of Qualcomm Stadium. It has arrangements in place to offer the same services at Torrey Pines to operators of the upcoming Farmers Insurance golf tournament.
Mapping Marketing Opportunities
Esposito said the transportation provider has developed a steady and growing stable of paying advertisers looking to reach target demographics for their products and services. In some cases, advertisers are looking for customer face time in areas with plenty of retail outlets, where riders can eventually purchase products being touted on the wraps, and possibly sampled in the cars.
“You might get a Vita Coco (coconut water) to drink on the ride, or a bag of Popchips to sample,” Esposito said.
In the San Diego market, sponsors have included Vita Coco, Swinerton Builders, Fox Sports San Diego and the Fuddruckers restaurant chain. Esposito said the business model has proven effective in all of the cities where Free Ride has operated, though the company does not disclose revenue and other financial data.
Esposito said downtown San Diego marks the company’s biggest opportunity to date to serve a high-density, year-round customer base, including a growing contingent of permanent residents and local business workers.
“It’s much more efficient than operating big buses that eat up a lot of fuel, and run half-empty a lot of the time,” he said.
Recent research by the Downtown San Diego Partnership and the University of California, San Diego estimated that downtown’s residential population is on track to double in the next 30 years, to more than 60,000. That’s in addition to the growing number of workers who will be heading downtown as companies increasingly locate there, stemming from millennial-age preferences for living and working in urban areas.
Sharing Economy on the Move
Kris Michell, president and CEO of the nonprofit downtown partnership, said the upcoming expanded circulator is an effective way to respond to several converging trends, including millennials’ demands for sustainable, congestion-free transit alternatives for access to urban centers.
“It’s going to be more efficient and cost less than having a fixed-route shuttle service,” Michell said. “You also have to get in line with what’s happening in the sharing economy.”
Downtown civic and business leaders have long been seeking ways to match vehicle traffic with available parking slots, while cutting down on parking-spot-hunting drivers roaming the downtown as they create pollution and added congestion. Civic San Diego decided in late 2014 to seek proposals for an environmentally friendly circulator.
The Free Ride service was subsequently picked from among seven original proposals received by the agency. Civic San Diego has budgeted $1 million initially, coming from city parking meter revenue, to cover startup costs of the service, including the purchase of vehicles. The service’s scope and the city’s investment would rise over time, depending on when it reaches specific ridership benchmarks.
Stephanie Shook, a project director at Civic San Diego who handles matters related to the parking district, said staff research found that a shuttle service using small electric vehicles would be more cost-effective than a fixed-route system using buses or vans. It is also a more flexible option as it can be adjusted to match traffic patterns in different locations at different times, especially during special events. “It’s a good scaling option,” Shook said.
Contract terms were being finalized at press time. According to Civic San Diego staff reports, San Diego Free Ride will contribute at least five cars that it currently owns, along with associated advertising revenue, to a separate legal entity that will operate the downtown circulator. A required portion of annual net operating income, likely 35 percent, will be set aside for potential reinvestment into the system.
The initial investment by Civic San Diego will support the acquisition of 15 new vehicles and the outfitting of 20 total vehicles, along with needed vehicle charging infrastructure, mobile app development, startup marketing and related launch expenses. The new service will follow advertising rules similar to those enforced by the city’s Metropolitan Transit System, with the exception that advertising of alcohol will be permitted as long as a “drink responsibly” message is associated with all campaigns.
Civic San Diego estimates that the 20-car Free Ride will create 25 full-time permanent jobs and 15 part-time jobs within the first year. It is expected to carry 3,000 passengers weekly at launch, with an average wait time of eight minutes per rider. The vehicle count could eventually rise to 50 if weekly ridership reaches 12,000 with the same average wait time, among other conditions.