Amongst the many car tech-related developments, few are receiving more attention than ridesharing services such as Uber and Lyft. To their credit, these companies have managed to build up enormous valuations and continue to receive major investments from traditional auto industry players.
The primary reason for all the excitement isn’t their current business model—providing convenient means to transport people from place to place—but the bigger vision they have of turning cars into a service. The idea is that instead of buying and owning cars, people will turn to this type of automotive service for all their transportation needs, thereby dramatically reshaping the automotive industry and our transportation infrastructure.
In many ways, the concept is certainly an intriguing and vaguely appealing one. In fact, many in the tech and urban-focused Silicon Valley area seem to accept it as a foregone conclusion. According to a recent TECHnalysis Research survey of 1,000 US consumers about automotive related technologies, including autonomous driving and ridesharing, however, reality is different. In fact, dramatically so.
To participate in the survey, consumers had to both own a car and expect to purchase one over the next two years. While this precludes representation from people who may have already given up on owning a car (likely a tiny percentage anyway), their impact has already been factored into current car sales. The purpose of this portion of the study was to better understand any potential future impact of ridesharing on car purchases.
The first key point that the study uncovered is that a huge percentage of the US population still has little to no experience with any ridesharing service. In fact, about 57% have never used a ride-sharing service and another 23% have only used one once or twice. This puts rideshare users in the minority. In fact, only about 20% are regular or semi-regular users of ridesharing. The top-level results are shown in Figure 1. (Note that the numbers don’t add up to 100% due to rounding.)
Fig. 1
Not surprisingly, the numbers vary by home location, with 31% of city dwellers, 17% of suburbanites and 9% of rural dwellers saying they use ridesharing at least once or twice a month. (FYI, city residents make up roughly 1/3 of respondents, suburban residents approximately ½, and rural residents about 1/5—a very similar mix to overall US census data.) The numbers also vary by age, with 32% of those under 35 using it at least once or twice a month.
More importantly, even among those who use ridesharing services, the reasons or situations in which they do use them strongly suggest occasional, supplemental usage to their regular driving. In fact, nearly 75% of ridesharing users view it as a supplemental service for situations such as after drinking, while travelling, or other circumstances where they don’t have access to a car. That leaves just 5% of the total population (or one quarter of all rideshare users) who actually use ride sharing more than just occasionally.
As Figure 2 illustrates, just 4% of all ridesharing users (6% of city-dwelling users) see their cars as either potentially or definitely being replaced by ridesharing users—less than 1% of the total survey respondent base.
Fig. 2
Survey respondents were also asked to rate the amount of influence that ridesharing services would have on their next car purchase (from 0% influence or no impact, to 100% influence or will definitely not buy a car because of them). The results showed that just 8% of the overall total said it would have a strong or greater impact (defined as at least a 50% impact), with 14% of city dwellers, 4% of suburbanites and 10% of rural dwellers selecting those same options. One interesting point to note is that not a single suburbanite said they would definitely not purchase a car because of ridesharing services.[pullquote]Ridesharing services have had an impact on the way that people think about cars, car ownership, and transportation in general. But their influence on new car purchases is likely to be extremely small for some time to come.”[/pullquote]
One last point the survey also explored was the potential impact that autonomous vehicles would have on ridesharing services. The largest group of respondents, 40%, said if ridesharing services started using autonomous vehicles, it would not impact their usage of the services. (FYI, only those who had used ridesharing services were asked the question). However, a combined 43% said they would either use ridesharing a little less, a lot less or completely stop using them if autonomous vehicles were put into service. Interestingly, the results were relatively consistent across the different location-based groups, but city dwellers actually had the highest percentage of respondents (15%) who said they would stop using the services completely if autonomous cars were deployed.
There’s no question that ridesharing services have had an impact on the way that people think about cars, car ownership, and transportation in general. But as the survey results dramatically illustrate, their influence on how, why, or if people actually purchase new cars is likely to be extremely small for some time to come. It’s certainly possible that we’ll see some dramatic changes in opinion over the course of the next several years, but for now, the obsession over “cars as a service” is definitely misplaced.
(Last week’s column covered additional data from the survey, including consumers’ interest in autonomous driving features and electric/hybrid cars, as well as factors influencing car purchases.)
The flip side is 20% of car owners use car sharing services at least once or twice a month. Since current car owners are surely the least likely group to use a car sharing service, this seems significant.
I’m not sure of that: car owners have some spending money (non-car-owners might not) and have a car-using lifestyle( non-car-owners might not).
I agree. NYC, for instance, it is still cheaper to ride the subway than Uber. Uber is good for a late night and you want to get home quickly for whatever reason, or have stuff you need to transport. Uber then is only easier than a cab in most boroughs, excepting Manhattan and some parts of Brooklyn.
Joe
Surveys are drastically skewed by how the questions are asked, and what pertinent data was presented or missing.
The key driver for automation is cost reduction.
There may be some group that is initially afraid of automated cars, but that won’t last long. The impact of a drastic price cut will be enormous and long lasting.
At current pricing, Uber only disrupts Taxis. Cut the price in half and disrupts everything. Taxis/Buses and OWNERSHIP.
So did the questions about automation include the vitally important fact of the drastic price reduction that will go with it?
As someone who has created, analyzed and reported on professional surveys for over 15 years I am indeed very aware that the manner in which questions are asked is absolutely essential. Having said that, to imply automation automation would lead to drastic price reductions actually adds a bias to a question because I’ve yet to see anything anywhere that suggests that’s true. In the car-loving US, it’s all about the freedom and flexibility to go where we want, when we want. The concept of ownership disruption is exactly what I was trying to test and I believe the data strongly suggests that will take a very long time in the US.
So your survey stuck with the same pricing? If the price stays the same why would there be any major change?
Automation will lead to drastic price reductions. That isn’t bias, it is the whole point. ~75% of Uber Fare revenue goes to Drivers. Uber’s plan is to use automation to disrupt ownership with lower pricing.
Bias is not supplying that information in the survey.
The main driver of ownership disruption is moving the cost below ownership.
IMO the value of the survey is nil. I could have predicted that result, if you don’t focus on the main issue, which is lower pricing.
I don’t think going autonomous automatically equates to reduced costs for Uber. Unless Uber is simply employing autonomous driving for hire by a subcontractor, they would be assuming material costs and liability that currently is shouldered by the drivers.
But either way, costs aren’t necessarily reduced, that 75% is simply shifted, unless you’ve done some calculations you can share. Or, unless you are implying that Uber wants to perform at a loss until…?
Joe
Costs are reduced. It has been studied many times.
http://www.businessinsider.com/how-self-driving-cars-could-solve-new-yorks-traffic-woes-2014-6
“many taxis remain
unoccupied even during peak hours, inflating operating costs to
$4 per mile. The Columbia proposal claims the use of a driverless
fleet would have an estimated cost per mile of just $0.50.”
It’s a reduction in driver salary (to Zero), its a reduction in insurance costs, its an increase in car utilization.
Taken together it results in dramatic reduction in cost/mile.
There is gold rush chasing this, and it is all for one reason. Cost reduction.
To do a survey ignoring the raison d’être of self driving cars, seems completely pointless.
That’s regarding NYC yellow cabs, not Uber. Right now Uber pays none of the insurance for the driver, do not own the cars (which means they do’t pay for fuel or maintenance), and if the driver isn’t being utilized, it doesn’t cost Uber a dime.
And in reality, even with taxi’s a lot of the costs are still incurred by the driver—they pay for fuel, car rental, meter rental, etc.
Unless Uber has a way to provide autonomous cars but not shoulder any of the material costs (which they currently do not), Uber is not saving money, except they at that point would not pay any of the fare to a driver. But that doesn’t mean the costs are reduced.
And in actuality the study shows the problem with taxis in NYC: “Since yellow cabs cannot be pre-booked and must be hailed on the street”. Change that and that changes everything without autonomous cars. What they are proposing is what the NYC cab system could also do now to reduce costs.
WRT this article, you are dealing with a city that already has an extremely low car ownership rate. How will this change the results of the survey?
Joe
The important takeaway, is they are talking about 50 cents/mile for a delivered service. Cab service is $4/mile, from what I see Uber is around $2/Mile. 50 cents/mile is a massive reduction.
Also critical: The Average Car ownership numbers are around 60 cents/mile. Autonomous moves the cost below the average cost of ownership.
I really don’t see how you (or others) don’t see that self driving cars will radically lower the cost of services, and disrupt the personal transportation landscape. This is the reason Billions are being spent getting these on the road ASAP.
Talk only commits those who believe in it though.
Uber is losing billions, and that’s before the various loopholes they’re exploiting close, and they achieve monopoly status.
I’ll bet you we won’t see that $0.50/mile in the coming 10 years. Not from Uber.
Okay, whose car ownership are you talking about? Commercial transit companies’ or individuals’?
You can’t really conflate a company’s cost of ownership with a private individual’s. And you can’t really assume cost of ownership is the primary driver (pun intended, sorry!) for private purchases.
Uber, as far as I can tell, is not interested in reducing consumers’ cost of car ownership. They want to displace it.
And does your calculations of Uber’s current cost per mile account for all material costs? I mean, the car and related expense currently costs Uber nothing. But if Uber goes autonomous, then they incur those costs (assuming the cars, insurance, and maintenance aren’t donated) which I would think drives that cost per mile up considerably.
I just don’t see what you’re talking about as relevant to Bob’s thesis.
How would you frame the question, especially as to not skew the results?
Joe
You are making confusion out of clarity.
Yes Uber wants to to displace car ownership, which is why pricing their service BELOW the price of individual car ownership is important.
The study I linked was projecting, the RETAIL cost to the consumer of 50c/mile for a autonomous ride sharing.
Today the Average car owner spends 60c/mile to own/operate his car.
50c/mile to the consumer to ride share is < 60c/mile for the consumer to own/maintain/operate his own car.
Cost is the driver for massive disruption in the ride sharing business.
How this relates to his Thesis, is it pointless to survey intentions while discounting the main driver, the very reason everyone is chasing autonomous ride sharing.
Massive cost reductions.
I can’t speak for others, but I’m not going to trade the convenience of ownership for 10 cents per mile. I’m more interested in Tesla’s idea, own your car but have it work for you when you don’t need it. I’m also interested in the idea of a lower cost of ownership through new manufacturing tech + electric + home solar charging. What if some company can build a good electric car with a 500 mile range and sell me a package deal with a solar home charging station, all for $400 per month over 6 years? And what if that same car can earn me $400 per month by working autonomously? That’s a tough deal to beat.
What convenience is that? The convenience of doing maintenance, the convenience of hunting for parking?
“In addition to cost savings, the study claims that self-driving
cabs could cut average wait times for customers from the current
five minutes down to about 36 seconds by more effectively
concentrating the fleet in areas of high
demand. ”
When you call for a car and it shows up for you in less than a minute, how could owning be more convenient?
I doubt you will make much trying to have your car make money for you. You would essentially have to subcontract your car to one of the bigger fleets, and to do that, you would have to be cheaper than their captive fleet costs. So you would get some smaller fraction of 50c/mile retail rate. Is getting 10c/mile worth having strange drunks ride around in your car worth it to you?
There won’t be much maintenance involved with a quality EV, and home solar charging means very little in ‘fuel’ costs. In high demand areas I have no doubt cars will come quickly. I don’t live in a city. Parking also isn’t much an issue for me, although I’m sure it is a huge issue for many in densely populated areas.
I think car manufacturing + EV + home charging could get us to a point where cars are actually very cheap to own and operate. Perhaps my math is off a bit but in my previous example, given the miles I drive annually, I think that would be 25 cents per mile. That’s before the possibility of my car making me money. I would assume the model where I am would be more along the lines of Airbnb, people hiring my car when I know I don’t need it for a day or two, perhaps a weekend. But at a low enough cost I won’t care about my car being hired out.
So it isn’t for you. Great.
That doesn’t’ mean drastically lower priced car services won’t disrupt car ownership.
Sure, but in my example car ownership is half of your projected car service cost. I agree that lower car service pricing is coming, but I believe owning a car is going to get a lot cheaper as well.
Your “example” isn’t fully costed.
Okay, tell me what I’m missing. I’ve taken into account the purchase price of an electric vehicle which includes a home solar charging station, and my hypothetical vehicle has a 500 mile range (I’m thinking five to ten years out here obviously), so there isn’t much in the way of additional fuel cost. And there won’t be much maintenance cost over the six years of financing (and a good warranty will cover a lot anyway). What else is there? You have to buy a vehicle, fuel a vehicle, and maintain a vehicle. I think soon that will be possible for less than five thousand per year. It’s almost a subscription model for purchasing a vehicle.
It’s missing reality. You have a negligible cost fantasy 500 mile EV with free solar charging.
Cost out a real car, and real costs.
Duh, I said this is what I see coming in five to ten years. And it isn’t a negligible cost fantasy, I’m assuming around 15 to 20K to build the car itself, and the solar charging isn’t free, it’s part of the financed package. EVs are vastly simpler to build and given the progress in manufacturing tech et al I don’t think it’s unreasonable to assume a much cheaper EV will be a reality in five to ten years, along with better range and cheaper solar.
Your $15K- $20K 500 Mile EV is a pipe dream. Solar is already starting to be dominated by installation costs.
You are using outlandish fantasy to prop up your claims.
The EV I’m talking about is indeed a fantasy today, but it is obvious to me that this is coming (and a solar charging station could easily be part of the package). I have no problem with you disagreeing with that. Keep in mind I’m not making a claim about anything that exists today, I’m predicting the future. I like my chances.
You are predicting the future based on the faulty assumption that EV prices will decline like Moores Law for semiconductors. They won’t.
Again Solar is a misdirect. If solar is a money maker that is a completely separate thing from your car. I could use my solar panel “profit” to subsidize my ride sharing.
Misdirects, and faulty assumptions and fantasies are your main arguments.
I’m not predicting a gigantic drop in the price of a car. I can already buy many cars for less than 20K (in Canada). I’m also assuming home solar charging is close to break even for the user, that you’ll generate and store and use all or most of that power for your car. I should clarify, I’m not talking about a huge solar system for powering your home and then using some of that for the EV. I’m talking about a solar charging system sold along with the car, just large enough to take care of the car. There won’t be any profit for you, just the benefit of ‘free fuel’. Then I’m assuming that whole package can be sold for around 30K and financed over perhaps six years. I like the idea of a 500 mile range because it takes care of most round trips (even long ones), no need to fuel up anywhere but home. A 300 mile range might also be good enough, and we’re close to that already.
These are all reasonable assumptions and I’m not using misdirection at all.
#1. Tesla just came out with the first 300+ mile EV. It’s >$100K USD.
You are predicting $20K/500 mile range, so you are predicting, a MASSIVE price drop.
#2. This still doesn’t make sense. To actually use power from solar to charge your car, you would need a second battery system to store the power, drastically increasing the system cost. All for negligible beneift.
And again. I could just build a simpler solar system, minus the battery, and either use the power in my home (offsetting electricity used) or sell the excess for profit. In either case I can use those savings/profits to offset my ride sharing service costs.
There is no economic case where powering your car from solar comes out as a net win here. At best it’s a wash. A red herring, or a misdirect.
I’m not predicting a price drop as much as I’m predicting advancement in manufacturing and technology. On the solar power system, you’re right, there’s no need for storage, you just need to offset the power used for the car (and not pay for gas). That would mean a simpler cheaper system. But enough power to provide me with free ‘fuel’ won’t generate enough profit for you to offset your car service. I think its maybe 7,000 kWh annually (or less) you’d need for the car. That’s what, maybe $700 or $800? Not even close to offsetting your car service. The question is whether a solar system can be cheap enough within five to ten years so that it makes sense as part of the transportation package. Obviously you think that’s not the case. It would have to be in the 5K to 7K range to make sense.
Are you being purposefully obtuse?
You are predicting a massive price drop, arguing the source of it doesn’t change that. Also there is no low hanging fruit in manufacturing to produce that kind of drop.
On Solar, again being obtuse. I never said the solar profits would completely pay for car sharing. Just the $700 or $800 (your example) saving would apply equally to both Ride Sharing costs and EV costs. So it’s a wash. It’s irrelevant to overall cost comparison, since it applies equally to both.
It doesn’t apply equally. The solar system is part of my car ownership package, it’s built into the cost per mile. You would have to buy a similar solar system in addition to your car service cost. That would increase your cost per mile.
We’re getting lost in the weeds here. The big picture summary is that I see a lot of manufacturing and tech coming in the next five to ten years that is going to lower the cost of owning and operating a car. That may apply to a car service as well, lowering that cost also. Car services have to operate at a profit in addition to buying a fleet of cars. Owning my car might be ‘factory direct’ where a car service is retail, but in dense urban areas the cost of ownership will be higher than in less dense urban areas or rural areas, that is obvious. Still, autonomous vehicles could mitigate or negate some of those higher costs associated with dense urban areas. What if the two costs are similar but your own car can drop you off and pick you up?
What is actually more interesting to me is that the cost to own and operate an EV will become cheaper than traditional vehicles today, and that will be a tipping point for EVs.
So you not only think 500 Mile EVs will be < $20K, but that they are going subsidize your $15K Solar installation out of the car profits?
That only puts you further off the deep end of fantasy thinking.
You’re not listening. The car needs to be around 20K and the solar system needs to be around 7.5K or a bit less. The total cost could actually be closer to 35K or 40K (car + solar) given the 8 year financing available today. The range of the EV might only need to be 300 miles, but I think 500 miles is a point where range anxiety basically disappears. If electricity is cheap enough generally then the need for a solar system disappears. In my area a solar system may actually not make sense, power is very cheap. And if solar doesn’t get as cheap as I think it will, then it won’t make sense as part of any transportation package.
I think we’re talking past each other. You are citing prices and problems today while I’m thinking five to ten years in the future. I find it isn’t useful to think of the now when trying to predict the future. This is why so many advancements are panned upon their release, people fail to think many years into the future and are only critical of what is available right now.
Again. You don’t get freebies from you car dealer.
It’s like when they tell you they are giving you an extra $1000 for your trade. You aren’t really getting an extra $1000, they are making it up on higher car/finance charges.
Solar shouldn’t enter into the equation. If you think it a money maker, you could do the same without an EV.
It just muddies the waters.
From what I read currently in BC, it takes between 15-19 years just to break even on a solar system. That didn’t take into account the interest lost if you just invested the money instead. It’s very much a subsidy based business, that only survives where government forces utilities to buy Solar at full retail prices (or even higher).
If solar doesn’t get as cheap as I think it will, then you’re right, it doesn’t make sense as part of any transportation package. But I’m not asking car companies to give anything away, they’ll still be charging thousands for the solar power system and making a profit margin on it. A company like Tesla might sell a package deal, but a company like Ford probably won’t. A home solar charging station wouldn’t be a money maker for the end user, it’s simply a way to generate free fuel. And as I’ve said, if solar doesn’t get cheap enough then it won’t make sense, given the low cost of ‘fueling’ an EV anyway.
You really can never let anything go. Solar simply doesn’t belong in this discussion.
Solar is no more “free fuel” to an EV owner than it is “Free Money” to someone who doesn’t own an EV. In the end the dollar net gain (or possibly loss) of doing an expensive solar installation will be the same whether you have an EV or not.
This is nothing more than a red herring on your part and you should have dropped it a half dozen messages ago when I first called you on it.
You simply are arguing in bad faith.
You also hand wave away the cost of parking. Are we both in Canada?
Average of major city parking in Canada is $250/month, where most people work:
http://www.huffingtonpost.ca/2014/04/03/calgary-parking-rates_n_5084866.html
I am in Ottawa, in a previous job working in the City core, monthly parking would have cost me about $250/month, on top of the $50/month extra I pay to have an above ground parking spot at my building. So $300/month, just for parking.
Then there is the hidden cost of parking:
https://www.washingtonpost.com/news/wonk/wp/2016/06/15/why-free-parking-is-a-big-problem/
“One analysis in Seattle found, for instance, that overbuilt parking at apartment buildings can drive up rents by nearly $250 a month.”
After you are done pricing real cars, throw another $300-$500/month for parking.
I discussed parking and mentioned that many people would pay more than the $100 per month I paid. It’s obvious the cost per mile calculation will be different depending on your situation. In your situation that calculation favors the car service. In mine it favors ownership.
The average situation favors car sharing. Your unique one does not.
I would agree that a solution catering to urban users should be more popular. Whether that’s car sharing or an expansion of public transportation, or your own car dropping you off and picking you up, I don’t know. I do know humans don’t like to share their spaces very much. And my situation isn’t unique. It isn’t the majority, but it isn’t just a handful of people either.
Using autonomous taxis fits the needs for not sharing spaces nicely.
Of course this will be more of an Urban success than a Rural one, but North America is considered to be about 80% Urban/20% Rural.
Less densely populated urban areas are a good fit for ownership as well though. Small cities that are spread out would mean a much longer wait when you need a car. Humans don’t like inconvenience. The market for ownership is pretty large I think. But I agree that some form of autonomous taxi should work very well in dense urban areas.
It’s more like $0.21-$0.25 per quarter mile no-driver, with all the overhead cost of maintenance, operations costs, commercial fees, permits, licenses, etc. It is most likely $1.20 to $1.75 to operate a commercial fleet of any vehicle depending on size of occupants it holds.
And then there’s this. Talk about disrupting:
http://arstechnica.com/cars/2016/08/google-to-undercut-uber-in-san-francisco-with-new-ride-sharing-service/
Joe
This brings up many other variable costs to put into place, for example the dead miles to travel back to HQ between trips, out of network AV that are now out of the network, bullied AV by passenger driven cars, maintenance is still king here.
That link to the pod based system has a cost of single mile at $2.45. No savings at all.
I’m unclear why we’re calling Uber/Lyft ridesharing. It’s a taxi service, e-taxi if we must, but we’re not sharing rides and costs, we’re ordering a specific ride and paying for it + wages + profit.
We’ve got real ridesharing in France, it’s different:
a) route is pre-defined: “I’m going from Marseille to Aix Monday morning at 10am, I got room for 3, pickup at 10 at the Porte d’Aix, dropoff at the Cours”
b) payment is strictly a share of gas costs, that ride would be less than 10€, vs 60€ for Uber, and 80€ for a taxi.
c) no amenities and freebies on-board (water, magazines, treats, music, wifi…)
d) that’s legal and covered with a regular driver’s insurance. Uber is possibly illegal (in France, both the employment status on the Uber side, and on the driver’side their tax & employment status), and not covered by personal insurance, drivers must get a commercial one.
“4% of all ridesharing users (6% of city-dwelling users) see their cars
as either potentially or definitely being replaced by ridesharing users”
Well of course. In the US, where there’s basically no public transport in most towns, you’re not going to see much interest in ridesharing because people need to own a car of their own in order to survive. In other countries, and in those few cities in the US where there actually is public transport and where it is possible to do without a car 99% of the time, ridesharing is a viable altarnative to having a car for the remaining 1%. Or at least it is if you have the disposable income to afford it.
For people on modest incomes, ridesharing is really far too expensive for most routine purposes — being cheaper than a taxicab doesn’t actually make it affordable as the way to replace an occasional need for a car. Here in toronto, the real car sharing solution that you see being used by people who don’t own a car but sometimes need one are companies renting cars by the hour.
So I read Uber launched Prime-like service this week, where you can get carpooled for $3 flat fee in San Francisco. Since Uber is that incredible with surge pricing, they will have no problem to tweak the software for the drivers to set up personal profiles and for the system auto-bid on their behalf for the additional rides. Then the drivers will auto-deploy.
Uber is just another taxi service people that can’t drive use and pay for.
In America people will not give up their cars it’s a symbol of freedom of movement. I think we would be smart to use our cars like a lot of Europeans do by taking public transportation to work and saving the care for other uses like shopping and vacation we coul save ourself lots of money that way.