All eyes are on Zipcar this week to see how it fares in its scheduled IPO which, at the mid-point of its proposed range, would command a market value of $639 million and be the first car-sharing company globally to go public.

However, less-known but already emerging, is a “second generation” of neighbor-to-neighbor car-sharing companies. The leader of this up-and-coming business model is San Francisco-based RelayRides. (For a more detailed look at RelayRides, take a look at the company insight profile (subscription required)). In contrast to Zipcar which owns its own 8,000-strong fleet of vehicles, RelayRides’ fleet is comprised of privately-owned vehicles which people are willing to loan out in exchange for hourly and daily pay-as-you-go fees from drivers who want access to cars.

By avoiding the overhead cost of buying and maintaining its own fleet, the company says that it will be able to offer car-sharing at hourly rates that are $1 to $2 less than competitors like Zipcar. According to Zipcar’s S-1 filing, c.70% of its costs and expenses are associated with its fleet operation making its business massively asset intensive. Further, with RelayRides, the hourly rates may fall as more car owners join the scheme and price competition between them increases. The second benefit is that RelayRides has a larger potential pool of vehicles that it can quickly integrate into its “virtual fleet” meaning that the business has the capacity to scale more easily and move into areas that aren’t economically viable for traditional car sharing services.

However, RelayRides is still young and with only 100 cars and 1,500 members it has a lot of catching up to do on Zipcar’s 8,000 vehicles and 560,000 members. But, with RelayRides having been recently topped up with a fresh pool of capital, it is hoping to play rapid catch up as it expands its presence in existing and new geographies. The expansion will not only give us a clearer picture of how amenable the average urban-dwelling American car owner is to lending out their vehicle to strangers for cash, but also show ultimately if and by how much it is more convenient and cheaper than the original fleet-deployed car sharing model.

More Cleantech Group Research (subscription required):

Coulomb Technologies
ZipCar Company Insight
CODA Automotive Company Insight