Downtown San Diego’s “free” shuttle service — known by the friendly acronym FRED — will get an expanded fleet that officials hope will improve the private company’s performance, after a first year when riders got a “busy” message sometimes as much as half the time.

San Diego will spend up to $5.7 million over five years to help New York-based The Free Ride put more all-electric shuttles on downtown streets.

The money comes from revenue from parking meters and public garages downtown. The original five-year budget was $2 million.

By 2020, there should be 30 FRED shuttles on the road, up from today’s 17. The funding includes upgrading a dozen existing cars to a longer-running lithium ion battery.


Downtown’s development agency voted on Wednesday to increase its contract with the young company — though there was a stern warning about the need to grow advertising revenue as a share of the budget.

David Aragon, an operation manager and one of the drivers for Free Ride Everywhere Downtown (FRED) waits at a local apartment building for his next pick up in the downtown area. (Nelvin C. Cepeda / San Diego Union-Tribune )

The Free Ride, founded in 2011 by two twentysomething entrepreneurs, started out providing gratis rides around the Hamptons beach enclave in New York.

It landed in San Diego in July 2014 with five shuttles financed totally by the billboards they displayed while offering free rides around downtown.


Around the same time, San Diego downtown stakeholders were looking for a shuttle system for the business district.

The Free Ride was chosen and launched a beefed-up presence in August 2016.

Here’s how it works: Riders “hail” a car through a mobile phone app — similar to the way ride-sharing services Uber and Lyft operate.

If a shuttle is available, the ride is accepted and the rider is picked up and delivered directly to the destination — at no charge. (Tips are accepted, though drivers are paid under the city’s living wage ordinance.)


Pedestrians can wave down a shuttle, but priority is given to app-based users.

To date, FRED has serviced 140,000 San Diego riders, with a high point of 12,500 trips in August.

That equals 200,000 miles in the all-electric vehicles, saving an estimated 12,000 gallons in gas.

But demand has outstripped supply. Founders James Mirras and Alex Esposito estimate that San Diego users having been getting a “no drivers available” response as much as 50 percent of the time.


It’s much better in non-peak hours; worst during evening drive time, they said. Riders are advised to try again until they succeed.

With the added shuttles, they hope to push performance close to 100 percent of rides accepted — though peak times will always be a little challenging.

“We’re excited to keep moving,” Mirras said. “The idea is to increase ridership with more cars and more people so we can get more advertising.”

Currently, advertising is only providing $212,000 of the $1.6 million budget, after a slow start.


But, with more vehicles, advertising is projected to reach nearly $1.2 million by 2020, which would cover about half of expenses of $2.4 million at that point.

“Advertising revenue needs to grow, I don’t care how. … Or this isn’t going to end well,” Civic San Diego board member Phil Rath told the company Wednesday.

Downtown officials said they are pursuing other public funding, including $5 million from the California Greenhouse Gas Reduction Fund via an SDG&E application, roughly $2 million from the California Air Resources Board and $250,000 from the state Department of Conservation.

They’re also talking to the Port of San Diego and to city officials about teaming up with other parking revenue districts to possibly join forces and expand FRED’s operating area.


Business

jen.steele@sduniontribune.com


Twitter: @jensteeley