Getaround, a startup providing peer-to-peer car sharing services, has received a $1.725 million federal grant to help expand the operation in the Portland area.

The grant comes from the Federal Highway Administration and is the first of its kind given to a peer-to-peer car sharing service. As part of the Portland launch, the Oregon Transportation Research and Education Consortium will study the impacts of peer-to-peer car sharing.

The concept is very similar to Zipcar’s car sharing program, except private individuals own the vehicles. What this means is a wider selection of vehicles (everything from a first-generation Toyota Prius to a Tesla Roadster) and a variety of price ranges ($6 an hour to $75 an hour, respectively).

Using an iPhone app, renters and owners can coordinate the entire transaction, from finding a car and making reservations to transferring the keys and payment. Owners can install a transponder in the car to hold the key and allow the doors to be unlocked, or transactions can be made in person. Getaround holds an insurance policy through Berkshire Hathaway to cover rented vehicles, and owners pay 40 percent of rental revenue to cover insurance and administrative costs.

Getaround says that the average vehicle sits idle 92 percent of the time and with the service, owners can make a few extra dollars while taking additional vehicles off the road.

Portland will be a test bed for the project. This year, the Oregon legislature passed a bill to put standards in place for car sharing, including a requirement of insurance. Portland will be the second major market to launch the Getaround service. Numerous vehicles from the San Francisco area are currently available.

“Since our inception, Getaround has viewed the city of Portland, OR as a perfect place for our service. Residents here have a reputation for being early adopters of innovative ways to solve transportation problems in the U.S., including traffic and pollution,” said Sam Zaid, Getaround co-founder and CEO. “We look forward to bringing the Getaround experience to Oregon to reduce car overpopulation while empowering people to turn a costly asset—which on average sits idle 22 hours per day—into something that can generate sustained revenue.”

For the service to launch in Washington, a bill similar to those passed in California and Oregon would need to be approved by the legislature. The legislature begins its regular session in January, but overcoming a estimated $2 billion budget shortfall will be the top priority for lawmakers.

The service will initially launch at Portland State University on Jan. 1 before expanding throughout the Portland metro area in February 2012. Getaround won the TechCrunch Disrupt New York competition and received $3.4 million in funding in September.

Car rental via smartphones has become a growing industry. Last week, Amazon.com CEO Jeff Bezos and others raised $32 million for Uber, a service that finds private taxis and town cars.