How green driving can cut costs

By Candice Krieger, October 3, 2008

Israeli technology entrepreneur Hod Fleishman is accelerating along a profitable path to improved fuel economy.

Mr Fleishman is the co-founder of driver-safety technologies business GreenRoad Technology, a California-based firm with offices in Israel and London. It provides in-vehicle sensors and devices aimed at reducing crashes and improving fuel economy.

The company has secured more than $17 million of funding from Sir Richard Branson's Virgin Green Fund, which focuses on green technologies, together with Benchmark Capital, Balderton Capital and - more recently - Amadeus Capital Partners.

Once installed, the device measures the driver's behaviour and communicates with him or her via three small lights. The green light means that manoeuvers are safe, and red mean unsafe - with the driving information collected online for an-alysis. The technology aims to help reduce insurance and fuel rates for firms which employ many drivers.

Founded in 2002, GreenRoad - initially called DriveDiagnostics - was built from scratch by Mr Fleishman, a former soldier in the Israeli army, and his friend Ofer Raz, the company's chief technology officer. They had an initial start-up cost of £500,000.

"Our idea was to predict who was a high-risk driver. Initially we did not think we could change people's driving habits. We just thought we could collect data about it."

GreenRoad was originally established to combat the problem of reckless teen drivers. But now corporate clients with large fleets constitute 70 per cent of the business as firms try to lower their fuel costs. These include the Ministry of Defence, which spends £120 million a year on crash-related costs; T Mobile; and the Metroline bus company, which has installed the GreenRoad device in all of its London buses.

"The reality is that there is a very strong correlation between how you drive and how much fuel you burn," Mr Fleishman, 40, tells JC Business. "This was always known, but as the price of fuel goes up, it's even more dominant.

"It also about being seen to be green. Today, the biggest expenditure for any fleet is the cost of fuel, and there are limited amount of things you can do to reduce your fuel consumption. If you use vehicles in your business, it is going to cost you.

"Other than ensuring the vehicles are maintained properly, the next best you can do is modify your driving. The reality is, when companies invest in any product, they want to see a return. In many cases, the quickest return is from fuel consumption."

He estimates that drivers can reduce their fuel costs by between three and seven per cent by improving the way they drive. After one year of using GreenRoad's device, he says, a T Mobile fleet of around 250 vehicles saved £400,000 in crash reductions and £50,000 in improved fuel consumption.

GreenRoad also work with US-based school-bus operator Laidlaw. "The cost of a crash to them is infinite. They need to invest a lot of money to prevent a crash. Fuel is a very large expense, but car crashes are an unknown expense. They can cost anything from almost zero to millions, depending on the severity."

More recently, in the UK, Derby Council and St Edmundsbury Borough Council have signed agreements to install the system in council and grey fleet vehicles. It costs around £20 a month per vehicle to install.

According to Mr Fleishman, a majority of clients use the system for safety reasons, but like the bonus of the fuel saving. "They see it as the cherry on top. It's just super. It works out as a very good incentive for companies."

Parallel to the developing corporate side of the business, the company has stayed true to its foundation to help young drivers. It is working with London Councils to launch a programme for families of teenaged drivers, to help them drive responsibly.

The scheme is being rolled out by Staffordshire Council, which is installing devices in the cars of local teens. Mr Fleishman says he is in discussion with six other councils.

"Teen drivers have a very high crash rate. One in five teens is involved in a car crash in their first year of driving. Families are not prepared for when their child starts driving."

The main problem, he says, is the attitude of young drivers. "They think they are invincible, or racing-drivers, and drive recklessly, which burns a lot of fuel."

The company's research also revealed an increase in reckless driving and fuel consumption during the GCSE-results period.

Has he met Sir Richard Branson? "Not yet, but I think with the rate we are moving in the UK, once the roll-out become more aggressive, it would definitely be good to get him involved more."

Six years on, and the company has grown from a team of two to 55. The next big thing for GreenRoad, says Mr Fleishman, is to get insurance companies involved. He is in negotiations with one major insurance company, which will offer discounts to people who use their road-safety system.

Mr Fleishman lives in Jerusalem with his wife and two daughters.

Last updated: 5:03pm, October 2 2008