Chariot

What did it do?

Chariot was a transport company that let passengers book seats through a mobile app and travel between home and work in shuttle minibuses at commuting times. New routes were chosen using demographic data and requests gathered from users. The company operated in several US cities and in Europe.

Why did it shut down?

After Chariot was bought by Ford's mobility subsidiary in 2016, it expanded rapidly into new cities. On some routes, however, demand remained very low; a pilot route in Denver generated only 110 rides in two and a half months, despite $250,000 in support from the city. Running chauffeured shuttles was economically challenging on routes with low passenger density. Ford announced in January 2019 that it would close the service, and shuttle operations ended in February 2019.

The story

In March 2014 Ali Vahabzadeh and Romain Di Vuolo left their jobs at a property start-up and founded Chariot to fill the gaps in San Francisco's public transport. The idea was app-booked shuttle minibuses running between home and work at commuting times. The company chose new routes based on demographic data and user requests, and even crowdfunded passengers in advance before opening some routes.

The model caught the attention of carmakers searching for the future of urban transport. On 9 September 2016 Ford CEO Mark Fields announced that the company would acquire Chariot Transit through Ford Smart Mobility; the price was reported to be $65 million. As of May 2016 passengers could choose between pay-as-you-go, preloaded credits or a $119 unlimited monthly pass. Under Ford, Chariot expanded rapidly: in the US it operated in Austin, Chicago, Columbus, Denver, Detroit, Lake Tahoe, Los Angeles, New York, Seattle and the San Francisco Bay Area, and in January 2018 it entered Europe with four routes in London.

But every new city did not mean demand. In a pilot launched in Denver by the city, local businesses and Chariot, the city paid $250,000 for six months of free rides on a route linking downtown, Capitol Hill and Cherry Creek; the route generated only 110 rides in two and a half months. Running chauffeured minibuses at low occupancy meant costs grew as scale grew.

On 10 January 2019 Ford announced that it would close Chariot; shuttle operations ended in February 2019. The Telegraph noted that the decision came just two years after the acquisition. The short-lived Denver route closed along with the company.

Chariot's story shows that an acquisition can bring a start-up capital and a brand, but does not remove the risk of scaling a model whose demand is unproven. Opening new cities before proving per-route occupancy multiplies vehicle and driver costs, not growth. And when a large company's strategy changes, a subsidiary that has not turned a profit becomes the easiest line item to cut.

Lessons for founders

• In shuttle-style transport, prove demand by signing up enough prepaid passengers before putting vehicles on a new route.
• Rather than using a large company's capital to open in many cities at once, replicate a city model where per-route occupancy has been proven.
• Municipal support is no substitute for demand; track real usage data even in a subsidised pilot.

Sources

1. Chariot (company) (Wikipedia)
2. Ford is shutting down its Chariot shuttle service (TechCrunch, 2019-01-10)
3. Ford axes e-shuttle service Chariot just two years after takeover (The Telegraph, 2019-01-11)

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