GoFun, a car-sharing platform backed by state-owned Shouqi Group, has launched a vehicle sharing service in Shenzhen, with prices even lower than those to share a bicycle. The company put 300 new energy vehicles (NEVs) into service. The rental cost is just CNY1 per kilometer plus CNY0.1 per minute, which works out at about half the cost of using Chinese ride hailing service Didi Chuxing. However, new customers can take advantage of a special deal of CNY1 for three hours of driving, which is even cheaper than bike-sharing services in the city. “It is a common strategy for technology companies to use low prices or even free services to attract new users,” said Zhao Ziming, Senior Analyst at Beijing-based consultancy Cyzone. “The price will go back to normal when the companies gain a certain market share.”

Carmakers like Shouqi Group are looking to develop vehicle sharing services based on the assumption that future consumers would rather make short-term use of those assets than owning them outright. In February, Didi Chuxing teamed up with 12 Chinese carmakers to develop an electric-vehicle sharing platform. Shenzhen has a high demand for shared vehicles because only one in 300 people with driving licenses can obtain the hard to get license plates needed to purchase vehicles, said Tan Yi, Chief Operating Officer (COO) of GoFun. After launching vehicle-sharing operations in more than 40 Chinese cities, GoFun now has 1 million monthly active users. At airports and railway stations in China it is often easier to rent a car for a ride home as there are always long queues at the taxi stands.

Shouqi said it will have 1,000 vehicles on the road in the city by the end of this year and will rent more dedicated GoFun parking spaces. A report from Dongxing Securities said the sharing-vehicle business requires high initial investment and operating cost, so most players won’t make a profit in the current environment. “Those who can lower the vehicle production cost or who have cutting-edge technology are more likely to win out,” said the report, which expects the shared vehicle market in China to be worth CNY9.28 billion in 2020, up from CNY820 million in 2017. Unlike China’s ride hailing market which is dominated by Didi Chuxing, there is currently no strong leader in vehicle sharing, the South China Morning Post reports.