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Can Ford fix New York City’s transportation crisis with a crowdsourced shuttle bus?

‘No one in the history of the world has created a profitable mass transit service. That’s our mission.’

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Photo by Amelia Holowaty Krales / The Verge

New York City is in the middle of a transportation nervous breakdown. Never before have city dwellers had so many options for getting around — subway, bus, bike, ferry, taxi, and every sharing app under the sun — and never have commutes been so hellacious. In the midst of all this chaos comes the Ford Motor Company, tossing one more transit option onto the pile in the hopes that it will help make the simple act of getting from Point A to Point B a little less suicide-inducing.

Starting soon, Ford is launching its on-demand shuttle bus service Chariot in New York City. The self-described microtransit service will start out in preplanned service areas in Manhattan and Brooklyn, eventually adding routes in additional neighborhoods based on customer crowdsourcing. It’s not a new idea — Via, an app-based communal bus service, has been operating in the city since 2015 — but Chariot has high hopes that its approach to ride-sharing will catch on.

Chariot uses algorithms to develop transit routes based on user demand

Chariot first launched in San Francisco in 2014, and recently began operating in Austin and Seattle. It’s part of a recent trend of app-based bus startups that use algorithms to develop transit routes based on user demand. Using the app, customers can book a seat in one of the company’s blue-and-white shuttle vans for around $4 a trip. It’s a cheaper but less convenient alternative to ride-hailing apps like Uber and Lyft. The company sold to Ford in 2016 for an impressive $65 million.

Chariot may have found an audience in tech-friendly cities like San Francisco, Seattle, and Austin, but New York City is a different beast altogether. The subway is one of the oldest (113 years old) and largest (daily ridership of 6 million people) in the world. It’s also broke as hell: it rains sewage, derails constantly, traps passengers in sweltering prisons, and all New Yorkers can do is shake our fist at the sky, tweet impotently, and then saddle up for another ride the next day.

Photo by Amelia Holowaty Krales / The Verge
Photo by Amelia Holowaty Krales / The Verge

The surface roads, where Chariot would operate, are no better. Over 70 percent of the city’s streets are in poor or mediocre shape, according to a recent report. And New York City is now the second-most congested city in the US, with drivers wasting over 89 hours in peak-hour congestion every year.

Standing next to one of Chariot’s blue-and-white Ford Transit vans in lower Manhattan on Wednesday, CEO Ali Vahabzadeh explained to me why he thinks his company can survive on Gotham’s rough-and-tumble streets. “We just have this funny feeling that New Yorkers are going to embrace Chariot pretty quickly,” he said. “Because we are a wholly owned subsidiary of Ford, we can crank up the assembly line as fast as we want and get more Chariots to New York within a week.”

“We just have this funny feeling that New Yorkers are going to embrace Chariot”

In other words, Chariot has a lot of runway to grow quickly before it has to start worrying about paltry concerns like making a profit or breaking even. Ford, like many of its competitors, feels existentially threatened by innovations in transportation technology, like self-driving cars and app-based mobility options like Uber and Lyft. In response, it spun off its own Silicon Valley-based mobility LLC last year. In addition, Ford made several big acquisitions and investments, like artificial intelligence startup Argo (for a whopping $1 billion) and, to a lesser degree, Chariot.

The evolution has still been painful, however. Ford’s stock has dropped by over 40 percent in three years, as it watched much smaller rivals like Tesla soar in valuation while soaking up all the hope and positivity about the future from investors. Last May, Ford CEO Mark Fields was fired and replaced by Jim Hackett, who previously headed the smart mobility spinoff.

So it’s against the turbulent backdrop that Chariot arrives in New York City. But this won’t be some modest bet on creating a niche transit service for just a handful of New Yorkers. According to Vahabzadeh, Chariot’s goals are much more ambitious. “Not to sound dramatic [but] no one in the history of the world has created a profitable mass transit service,” he said. “That’s our mission.”

“No one in the history of the world has created a profitable mass transit service”

Rather than attempt to plan its own routes, Chariot allows its users to tell it where it needs to go. “We said, ‘Why are we standing at the table, master-planning what the second, third, and fourth route should be?’” Vahabzadeh said. “We should just let the public tell us what the next service area should be through basically a popularity contest.”

New users are asked to provide their “commute to” and “commute from” addresses, which Vahabzadeh said may be different from home and work addresses, because they could include ferry terminals and subway stops. “If we have a route or we cover that service area, great and we’ll direct you to where you need to go,” he said. “If we don’t, you’re producing a virtual vote for launching service in that commuter corridor... Once we get the critical mass, like 50 votes, we can launch the service within a week.”

Vahabzadeh said that Chariot hopes to have at least 60 vans in New York by October. The initial service areas will be Manhattan from midtown to the Lower East Side, and Brooklyn between Greenpoint and Dumbo. Chariot is registering with the city as a black car service, with an affiliated base in Brooklyn. And because its vans can fit up to 14 passengers, Chariot will also qualify under New York City’s new law requiring businesses to offer their employees the opportunity to use pre-tax income to pay for their transportation. (This benefit was also recently extended to Uber and Lyft’s respective carpool services.)

Some will read about Chariot’s pre-planned service areas and dismiss it as another Silicon Valley-originating, tech-facing transportation service for rich, white yuppies. (Lyft was roundly mocked recently for failing to realize that one of its latest products — fixed route, flat fee carpool trips — was really just a bus service.) And they won’t be wrong. Vahabzadeh acknowledges that those types of customers will be Chariot’s “early adopters,” but that he ultimately hopes to expand the service to low-income neighborhoods with limited transit options. He said that Chariot is working on “a couple of pilot projects” exploring ways to include more customers who lack credit cards, bank accounts, and smartphones.

“We want to be a solution for 100 percent of commuters, not just people who can afford a smartphone and bank account,” he said. He didn’t share specific ridership numbers, but noted that all types of people use Chariot, including the elderly, people of color, and “people with hourly jobs.”

Photo by Amelia Holowaty Krales / The Verge

The challenges will be steep. Microtransit is not a sure bet. Earlier this year, another Ford-backed on-demand bus service, Bridj, shut down after failing to close a “major deal” with an unnamed car company (rumored to be Toyota). According to CityLab, Bridj’s missteps were numerous:

Six months in, the vans had only provided fewer than 600 rides, far short of the 200 per day initially projected; promotion might not have been adequate, and riders complained the routes weren’t so convenient after all.

Experts note that microtransit services need to partner closely with government agencies in order to survive. Without major subsidies, these types of businesses are incredibly difficult to make work. Unlike the driver-owned vehicles that comprise Uber, Lyft, or Via, Chariot owns and maintains its own fleet, as well as employs its own drivers. (Those drivers were recently unionized in San Francisco.) Cities confronting mobility crises like New York City are increasingly turning to private operators to outsource demand, raising a host of new concerns about the privatization of public transportation.

“Cities are the hubs of activity right now,” said Jessica Robinson, director of Ford City Solutions. “And mayors know that if their cities can’t move, the cities don’t grow. They’re trying to be good stewards with public dollars, but they don’t always have those tools to react quickly.”

The love between tech-transit companies and municipalities can be mutual. The capital-starved startups lust after tax breaks and incentives, while the cities crave real-time data about resident commuting patterns. But Chariot has Ford (market cap $45 billion), which could give it a leg up over other ride-sharing services.

Chariot’s arrival may concern those who believe that public transportation should be government run and not subject to the whims of the market. But Vahabzadeh says cities are growing faster than the gears of government grind. “Does it make sense to buy that extra half-a-million-dollar bus, wait through the procurement process, get budgeting, wait for the bus to be delivered, hire the drivers?” he said. “Why can’t we solve our transit issues literally overnight with Chariot at zero cost to the taxpayer?”