ATHENS ORACLE

Califorina startup Canvas applies cell phone business model to the car business

Tomas Pierce, Photography Editor

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A company named Canvas, that is funded by Ford Motors, is attempting to apply a new business model to the automotive industry. In an arrangement that seems reminiscent of leases and mobile phone plans, customers pay between $400 and $500 per month in exchange for the right to use a company vehicle. Subscriptions supposedly bundle vehicle maintenance, insurance and roadside assistance. The product launched in early May of last year.

“I think that being that its similar to a cell phone, that is interesting, if it is on contract it is very similar to what most car dealers do, where either you are going to finance it for so many years or you are going to lease it,” said Juanita Dunham, teacher of Personal Finance and Principles of Business.

A Canvas customer is supposed to pay a certain price each month and obtains the right to drive a particular vehicle for a certain number of miles each month. Being able to drive more miles costs more. Unused miles in one month are also supposed to be usable in following months.

“I think it is pretty interesting that they do charge based on the number of miles they want to drive…and stuff like that I think that is pretty cool because it gives people the opportunity to have a car and say I only want to use it for this amount of miles,” said Dunham.

Other automakers have launched subscription services. Porsche offers a service for $2000 per month, and Cadillac offers a service for $1500 per month. Per their website, the billing of the Canvas service decreases over time.

“I do believe that Canvas has an interesting business model. They seem to have taken the rental car/cell phone industry and combined them together. I think it will be interesting to see how consumers respond and their ability to offer a consistent, reliable product long-term,” said William Nassif, teacher of Business Law, Principles of Business and Finance, Accounting and Business Management at Athens Drive High School.

Canvas currently operates in The Bay Area and West Los Angeles in California.

“I think it will be a good idea in the short-run for the LA/SF area. The demographics of that area are conducive to supporting a scheme like this. Also, the income levels present will definitely be able to support this,” said Nassif.

A user can keep a vehicle as though it was their own while they are subscribed. Ford’s goal is to build expertise in fleet management and billing. They believe they can use this project to gain a wider segment of the transportation market that would otherwise not use a car.

“I didn’t see anything in there about insurance…, or if you wanted to go somewhere extra but didn’t have the resources to afford it,” said Dunham.

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