A startup that is merging electric car-sharing with on-car advertising is getting a major boost from Hyundai. WaiveCar, which rents ad-laden cars for free, will add 400 Hyundai Ioniq vehicles to its fleet by the end of next year. The move allows WaiveCar to expand its Los Angeles service area and launch in three new cities.
The deal marks a major expansion for the startup, which launched in January by servicing Santa Monica with a small fleet of 20 Chevy Spark electric vehicles. With the larger fleet, WaiveCar plans to serve a broader footprint including downtown Los Angeles, said Zoli Honig, the WaiveCar's chief technology officer.
The company rents on-demand electric vehicles for two hours at no cost. Drivers can extend their rental for $5.99 an hour. The business model is reliant on revenue from brands that buy ads on the cars. Options include vehicle wraps or a roof-mounted digital display that can run geo-targeted ads based on the car's current location, time of day, or even weather conditions.
But with a limited fleet, WaiveCar was having a hard time luring big ad deals.
"Many of the big brands would come to us and say we love your product, we think it's amazing and innovative but 20 cars doesn't get us out of bed. We need at least 100," Mr. Honig said in an interview. "That's really the chicken-egg problem with a lot of startups." But with the Hyundai deal, "we are really going to be able to expand on that."
WaiveCar will add 150 Ioniqs in the first half of 2017 for Los Angeles. By the end of 2017, an additional 250 of the cars will be added, allowing WaiveCar to add three unspecified cities, according to the announcement. Financial terms were not disclosed.
Hyundai executives see the deal as a way to gain exposure for the new Ioniq, which is available in hybrid, plug-in hybrid and electric versions. WaiveCar currently limits it fleet to electric cars. The Ioniqs being added have a range of 124 miles, according to a press release announcing the deal. But Mr. Honig said WaiveCar is considering adding hybrids and plug-ins so it can target drivers needing a longer range.
For Hyundai, the WaiveCar deal "allows us to reach potential customers and give them the opportunity to test drive our outstanding Ioniq electric while generating awareness for the Ioniq brand at the same time," Mark Dipko, director of corporate planning and strategy at Hyundai Motor America, said in a statement.
Mr. Honig declined to disclose what ads might be shown on the Hyundai vehicles. A press release announcing the deal suggested that some ads might plug Hyundai: "For example, while sitting in morning traffic on the 405 freeway, the ad could read, 'This commute would be a lot more comfortable in a Hyundai Ioniq,' " the statement said.
The roof-mounted ads target other cars on the road and people on the street. The display can be programmed to include video, pictures or even a Twitter feed, Mr. Honig said. "The ad can literally display from block-to-block," he said. "So if you are next to a Starbucks, it might pop up and say come in for a Frappuccino," he said, using a hypothetical example.
WaiveCar's first ad deal was with Oscar Health Insurance Corp. It has since cut deals with Travel Savvy, a travel media company, and XYZ, which runs the .xyz web domain.
Another advertiser is Lyft. The ride-hailing provider is using WaiveCar ads to raise awareness in downtown Santa Monica. WaiveCar, which provides cars without drivers, operates in the same on-demand transportation category as Lyft, which includes drivers. But they are not competitors, Mr. Honig said. "Sometimes it makes sense that you need your own car like you are going to Costco," he said. But "WaiveCar isn't great if you are going to the airport."
Users book WaiveCar vehicles using a mobile app, which is also used to unlock the cars. At present -- and before the Hyundai deal kicks in early next year -- rentals must start and end inside Santa Monica, although drivers can take the car anywhere within a 20-mile radius. If the vehicle has less than a 25% charge remaining upon the return, it must be dropped off at one of Santa Monica's car-charging stations or at WaiveCar's headquarters. If the vehicle has more than 25% charge, it can be returned to any legal parking spot.
WaiveCar allows drivers to extend their free time if they drive the car into specified areas, allowing the in-car ads to reach a desired target. "It's almost like gamifying the driving experience," Mr. Honig said. "You can get points for driving in certain areas. If we see that the car is near Hollywood Boulevard, we might send a little notification that says if you drive down Hollywood Boulevard, you'll get an extra half hour on your rental."
He added: "We can highly incentivize our users to deliver targeted ads to certain areas, and that could be based on a high demand of vehicles at a certain place or a high demand from advertisers.