Future of connected cars and mobility: Why Uber/Lyft won’t kill car ownership & are more expensive

AnnualTransporationcostsMany people are saying that new mobility service will end car ownership as we know it. A new study examines the future of cars and suggests that there will still be private car buyers but new mobility will continue to supplement public transportation, while car sharing and ridehailing services will fuel more car sales

Researchers at the Center for Automotive Research decided to weigh in with their own analysis of new mobility options and published a white paper. Here is some information from the report.

New mobility services offer transportation as an on-demand shared service, enabling users to have access to a vehicle  for a short-term and on an as-needed basis. New mobility services are part of an incremental change in travel behavior, especially in urban areas, toward a multimodal system that is less car-centric.

The new mobility services include:

  • Ridehailing such as Uber, Lyft, Didi, Ola and Gett.
  • Ridesharing is a type of carpooling that uses private vehicles, arranging shared rides on short notice between travelers with a common origin and/or destination.
  • Carsharing are servucees that allow short time rentals of cars such as Zipcar, Car2Go and Enterprise CarShare.
  • Bike sharing-offers free or affordable access to bicycles for short-distance trips, mostly in urban areas.
  • Microtransit is a wide category that include private transit services that use small buses and develop flexible routes or schedules (or both) based on customer demand.
  • Mobility-as-a-Service (MaaS) provides person’s transportation needs are met over one interface and are offered by a service provider.
  • Shared autonomous vehicles (SAVs) are fully self-driving vehicles that do not need human operation. These services have not been launched yet. Major players are Google EasyMile, Uber, Ford and GM.

ridehailingpewResearchers found that new transportation  are used more often on weekends and for social trips from 8:00 pm to 4:00 am, when public transist is not generally available. (New Mobility Services) NMS are also used for the last mile such as ride from the transit station home. The Pew Research Center found that only 15% have used ridehailing apps, 51%have hear of them but not used them while 33% have not hear of ridehailing apps.

3% of all American adults use ridehailing services on a regular (i.e. daily or weekly) basis, while 12% use these services once a month or less often.

The report shows:

  • Millennials and, to some extent, Baby Boomers will be the driving forces of the adoption of new mobility services. Millennials are early adopters. Baby Boomers are aging and will need mobility services.
  • Overall, new mobility services work best in denser and walkable urban areas with good public transportation networks.

Based on the current market potential, travel behavior trends, and historic growth patterns of existing operators, CAR estimates that carsharing programs will reach almost three million members and comprise more than 39,100 vehicles in the United States by 2021.

“The shift towards new mobility services and away from the private vehicle will be responsible for some losses in sales of new and used vehicles, but these losses are likely to be very small compared to the overall number of transactions involving vehicles every year. In addition, services like carsharing and ridehailing will contribute to a greater vehicle turnover and a shorter vehicle life expectancy, partly counteracting forces that decrease vehicle sales.”

Most households that use carsharing services do not own a vehicle.

New mobility services will likely contribute to a change in preferences, away from vehicle ownership and towards “vehicle usership,” exploring new business models that do not involve the user owning a vehicle and having all the inconveniences associated with that.

Depending upon transportation use Using solely a ridehailing service is 1.5 to 3.8 times more expensive that owning and operating a private vehicle in the four cities used for this comparison.

The analysis revealed that carsharing is more cost efficient than car ownership for drivers that own larger vehicles or have a low annual mileage, because of the high fixed costs of vehicle ownership. Overall, carsharing is more cost efficient than the private vehicle if the user travels less than 8,200 miles annually.

Read report.