The Washington Post had this interesting story on Steve Case’s decision to buy a controlling share of U.S.-based careshare company Flexcar, through his Washington, D.C.-based private investment firm Revolution LLC. Lee Iacocca, who became an auto-industry legend for his time as chairman and CEO of Chrysler Corp., is also an investor in 6-year-old Flexcar and has become a director and senior advisor.

“Car-sharing is poised for explosive growth, as it enables consumers to save on the expense and hassle of car ownership, while reducing traffic and pollution,” Case, known for founding America Online and brokering its controversial megamerger with Time Warner, said in a press release. ”Based on recent national surveys and our analysis of the market, we believe Flexcar can grow to serve 1 million members, sharing 20,000 cars, five years from now.”

Flexcar’s fleet today is limited to 450 cars spread throughout 30 major U.S. cities, including Los Angeles and Chicago. With Case now in charge, he plans to immediately expand key fleets by 50 per cent. He also plans to expand service to New York, Boston, Miami, Philadelphia, San Francisco and Austin before the end of 2006.

Perhaps most interesting, Case wants to build within his national fleet the country’s largest fleet of hybrid-electric vehicles to promote U.S. energy independence and to help reduce urban smog.

Unlike car rental agencies, which rent vehicles by the day and week for longer trips, carshare programs like Flexcar offer affordable plans for people who live in cities and need a car for a couple of hours, not a day. Gas and insurance is usually included.

This may be low-tech, and a far departure from Case’s dot-com adventures, but it’s a great way to reduce the number of cars on the road. As the Web site says, “If you live in or near the city and you can commute by bus, carpool, bicycle or foot, you can probably save hundreds of dollars a month by relying on Flexcar rather than a personal vehicle for your occasional driving needs.” I would guess it also reduces the need to have a second car in the household.

I’m all for it.

BTW: We’ve had a similar operation in Toronto for five years now called Autoshare, which does have Smart Cars and Priuses in its fleet. For a list of car-sharing companies across North America, check out this site. I wouldn’t be surprised if Case is on a mission to consolidate this scattered network, not unlike the way small ISPs were consolidated in the early days to create giants like AOL.

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