Nice and slow: Ekar launches with the watchful blessing of UAE authorities
Earlier this year, UAE news outlets were abuzz with the launch of Udrive, a car rental app running on a pay-per-minute scheme. Clickbait headlines on March 15 spoke of “rent-a-car for just 50 fils” models through an app that “will probably stop you using a taxi ever again” in Dubai.
Only days into its launch, the app’s pay-per-minute scheme was suspended by the Roads and Transport Authority (RTA), on the basis of regulatory issues. Udrive’s “new experience” has since been limited to a pay-per-day scheme.
From A to B through A to A
Vilhelm Hedberg, cofounder at Ekar, a pay-as-you-go car rental service, currently operating in Abu Dhabi and expanding into Dubai, might know a thing or two about navigating such regulatory and operational hurdles in the UAE.
Drawing on their own user experience of on-demand car rental apps in Canada, Hedberg and his partner initially looked into exporting the model to the region two and a half years ago.
Dubai’s highly dispersed driver base across either side of one big highway, Sheikh Zayed Road, coupled with Ekar’s then limited fleet, did not allow for the free-floating car-sharing model, whereby rental cars are scattered arbitrarily throughout the city and dropped wherever they are used. It required a 500-meter radius proximity from any car to any use - and as short as 300 meters in the Dubai summer heat - and consequently a fleet of 600 to a 1,000 vehicles in Dubai.
Currently, Ekar offers two versions of the round trip or A to A model, whereby a one-way system allows users to pick and drop off cars within its network for a low fare, and drop off outside the network for a higher fare.
The legal winding road
Instead of mass-targeting the UAE’s sizeable driver base, Ekar had a strategic entry point in its crosshairs: airline crew who typically stayed in the region 10 days out of the month and steered clear from cost-inefficient car ownership – a natural extension of which would eventually be air passengers coming through Abu Dhabi and Dubai international airports.
Ekar’s first pitch to Etihad Airways went without a hitch, and resulte in a partnership that was announced in March. In tandem, Ekar was also working on on-boarding Emirates Airline. But the legal ambiguity and stringent interim restrictions governing the regulation of car-sharing and adjacent industries in Dubai would require a very considered expansion into the emirate.
Ekar had been working on a permission to legally operate its car-sharing business – essentially, a special allowance under the car rental trade license to run less than 24-hour rentals – in Dubai for the past two and a half years, but is yet to obtain it.
Last year, the RTA was reported to be considering an hourly-based smart car rental system for the city’s metro station, and to offer, in the process tenders to private companies in the near future. Companies that do win the bid would be expected to work alongside the RTA to park their vehicles along the metro network station - and optimistically, around other select areas in Dubai.
“Seeing some of our competitors come into the market before us was good for us in some ways, because it only highlighted our corporate responsibility toward government regulations to abide by the rules,” affirmed Hedberg.
Moving to the fast lane
Hurdles aside, Ekar has been progressing with pace, with plans to expand its fleet of 37 cars to 75 this month – mostly in Dubai, where it just officially landed the Emirates Airline deal for 24-hour car rentals for its employees.
Having raised nearly half a million dollars from a consortium of investors two years ago, the team is currently in discussion with VCs for a series A round of $2 million, and with car rental companies to grow its business.
While currently partnering only with Nissan, it has been approached by large automotive brands and car dealers looking at getting their fleets to work the streets. Granted, car rental companies would eventually consider cutting the middleman and model their business after Ekar’s, while competition like Udrive would inevitably clear regulatory hurdles and take off in the UAE.
Still, Ekar would have a two-fold edge: an oligopoly, high-barrier market created by the reported RTA tenders, and the platform’s exclusive license in the GCC for Invers, the largest car share hardware and software provider. The latter enables API integration for booking, for example, a car along with a metro ride at once – an option that the RTA is, naturally, keen on pushing.
Ultimately, Ekar is looking at scaling its business throughout the GCC, and transforming its fleet under the UAE’s driverless and electric car systems ambitions - the first step of which would be electric cars parked at charging stations across the Emirates.
A free-floating model, however, would be highly unlikely should UAE authorities continue to tighten their grip on car-sharing and on-demand transport businesses, and push for an end-to-end solution that ties back into their revenues and networks. Naturally, Ekar would want be part of the solution, not the problem.
Feature image via Ekar.