Can Uber or Lyft Replace Car Ownership?

Can Uber or Lyft Replace Car Ownership?

Many people use ridesharing services when on vacation, traveling in an area they are not familiar with, or when out with friends. For some people, the idea of replacing their car with ridesharing services is ludicrous.  However, many people are beginning to do just that. 

Can Uber or Lyft replace car ownership?: For about 25% of the population, ridesharing services are cheaper than car ownership.  Using ridesharing is almost always cheaper than owning two cars.  However, it is unlikely that ridesharing will eliminate car ownership for everyone.

Ridesharing service companies like Uber and Lyft continue to grow in demand while the number of new drivers and vehicles decreases.  It is unlikely that ridesharing will eliminate car ownership, but it does seem to have had an impact on the number of drivers and cars on the road.  Read on to discover how ridesharing services have changed the way many people navigate their daily lives.

Car Ownership Numbers

The number of people who own cars has been decreasing since 1983.  Several factors have impacted car ownership. Some of them are:

  • Work from home jobs
  • Decreased percentage of people with driver’s licenses
  • Increased and improved mass transit
  • The increased cost of car ownership, which includes:
    • purchase price
    • insurance
    • gas
    • upkeep/maintenance
    • parking (in certain areas)

Furthermore, according to the article “Millennials and Car Ownership? It’s Complicated” by Melissa Etehad and Rob Nikolewski from The Los Angeles Times’ website, millennials have shown tepid interest when it comes to car ownership. It remains to be seen if this will change as they enter parenthood.

Uber and Lyft have contributed to the decline since people living in areas with easy access to ridesharing give up their cars (or at least the second car in the case of some families).  The largest decrease in car ownership has been in households having more than one working person in the home.  Many of these households, especially in cities with a high concentration of ridesharing, have let go of their cars.

Statistics reported in “The Decline of the Driver’s License,” by Julie Beck from The Atlantic, suggest that Uber and Lyft are contributing to a decline that was already happening.  However, the same study found that car ownership is increasing in the cities where they operate most heavily.  This contradictory information means that the actual impact of ridesharing is still unclear. 

It seems that, for some families, it does decrease the number of cars, but overall car ownership still rises.

Pros of Using Ridesharing

Ditching a car and using ridesharing full time does have some benefits.  Many of these advantages depend on the area in which you live.  Ridesharing offers a better use of commute time, ease of getting a ride, and personal safety. 

Better Use of Commute Time

On average, Americans spend 335 hours annually driving.  In many metropolitan areas, lengthy commutes waiting in stopped traffic is the norm.  One of the benefits of using Uber or Lyft is being able to use this commute time for other things.  It is like having a personal chauffeur drive you to your destination, decreasing stress and increasing time spent doing other things during the commute.

While being driven to and from work, you have time to complete work tasks or make phone calls.  You can spend the time on personal interests, such as catching up on email, reading a book, or taking a nap.  However you spend your time, you must add this use of commute time into your calculations of the value of ditching your car in favor of ridesharing.

Ease of Getting a Ride

As both Uber and Lyft increase their presence, especially in high population density areas, the ease of getting a ride has increased.  The apps also allow a person to wait inside watching their mobile device for their car to arrive instead of standing outside in poor weather conditions trying to hail a taxi.  They also negate the need to walk to the nearest public transport stop.

Safer Alternative

One of the main concerns with ridesharing is the idea of getting into a vehicle with a stranger.  However, ridesharing is typically safer than other ride options, like public transit.  This can be especially true in later hours or in a poorly-lit area, which are some conditions that put the rider at risk.  Ridesharing allows the person to wait inside in the safety of their building while they wait on their ride to arrive. 

Waiting inside and not trying to walk to mass transit or hail a cab keeps the person out of bad weather and prevents them from being a target for crimes of opportunity.  However, it is still important that riders remember to maintain personal safety and follow the app rules to make sure they are getting into the right car.

Ridesharing has made great progress in personal safety.  The app gives the driver’s name, license plate, type of car, and arrival time.  The driver is directed to greet the rider by name, showing that they are there because of the app.  Finally, many states now require a logo of some sort to be placed on the vehicle.  This allows the person being picked up to make sure they have the right vehicle. 

Cons of Ride Sharing

Taking Uber or Lyft everywhere does have some problems.  Going car-free presents a few disadvantages.  Some of the major considerations are logistics, waiting for a ride, and inconsistent pricing.  For some people, these cons are a barrier that prevents them from going car-free or even decreasing car usage.  If you are wanting to give up your car, you will need to plan for these obstacles.

Logistics

Going car-free means learning how to coordinate rides.  For a single person, it means knowing when the typical “down times” are in your area with few ride shares available.  For a household that is going “car-light,” meaning fewer cars than drivers, they must coordinate who will use their car and who will use ridesharing.

One car per household often means spontaneous or unexpected trips are more difficult to handle.  Having a regular schedule does assist with coordination, but that is not always possible.  Therefore, logistics can be challenging and do need to be planned before going car light.

Waiting for a Ride

Even when catching a ride is typically not a problem, it can take 15 to 20 minutes to get a ride at times.  This means, if you are headed to work, there can be potential issues with arriving at a set time.  This can be addressed by:

  • waking up earlier and checking the app for availability
  • planning to arrive at work early
  • having a job with a flexible start time
  • request a ride early as needed.

With Uber, you can schedule rides up to 30 days in advance for a specific destination, date, and time. With Lyft, you can schedule your rides up to 7 days in advance.

When waiting for a ride home, check the apps early, and request as needed or use the extra time to work on other things while waiting. 

Inconsistent Pricing

Using ridesharing may be a cheaper alternative, but it is not cheap.  There is a fine line between breaking even and spending more when doing ridesharing exclusively.  Because of this, it is important to use the apps as cheaply as possible.  One way to do this is by comparing Uber and Lyft to see which is cheaper each time you need a ride because pricing constantly changes based on the vehicles available.

Timing your rides can also help to avoid surge pricing.  Surge pricing is how prices increase when the demand is higher or drivers are few.  Adjusting work hours or running errands near work can help ensure rides are needed during cheaper times

It is also important to know that the more you ride, the more discounts you get.  When using ridesharing full time, you will constantly get offers, such as 25% off.  Most full-time riders rarely pay “list price.” This can help decrease the overall costs.

Doing the Math

As Lyft and Uber continue to grow, 9% of people have chosen not to replace their old car with a new one and depend on ridesharing services or a combination of ridesharing and public transit to get around. 

MarketWatch’s article “Will Uber and Lyft Make ‘Car Cutting’ the New Cord Cutting? a recent study is reported that 25% of American drivers would benefit financially by eliminating car ownership in favor of ridesharing. 

One of the main reasons for this is the cost of purchasing, upkeep, and other expenses of owning a vehicle are often far more expensive than the fees from using ridesharing.  In certain areas, such as the suburbs, accessibility is good and rides easy to get and use.

Robert Farrington conducted an experiment with the costs by eliminating his family’s second car in favor of taking Uber everywhere he went. He tracked his cost to see which was more expensive.

Traveling by personal vehicle costed Farrington:

  • Gas – $90
  • Maintenance – $140
  • Insurance – $50
  • Registration/Smog – $12
  • Total Monthly Cost – $292

Traveling by Uber costed Farrington:

  • Average Ride Cost – $1.99
  • Uber Pass – $20
  • 9 Rides per Week – $72
  • Total Monthly Cost – $91.64

For Farrington, taking Uber saved him over $200 per month in cost before even considering the cost of the car.  He reported that he found it easy to get rides at the time of day he needed to and from the places he was located.  He also used mass transit and the other family vehicle at times, decreasing his ridesharing cost.

Triple-A Study

However, in the article “Ride-Hailing Services (Uber, Lyft) Costly Alternative to Owning a Car,” a Triple-A study that made a cost comparison in 20 major metropolitan areas was presented. The study found that ridesharing would double a person’s transportation costs annually. 

However, the following information needs to be carefully considered before trusting this study:

  • AAA is not an unbiased source: They sell a service to car owners and have a vested interest in convincing car owners that it is cheaper to own a car.
  • The ridesharing costs were based on 100% use: They did not consider if the person might walk, use mass transit, or have access to another vehicle at times, such as a “second” family car. 
  • Parking was estimated:  Parking can be a huge expense living in a major city.  AAA did consider parking but admitted that they only used an estimated expense.  It also did not include additional costs, such as registration, smog tax, and specific cost local to an area that would increase the cost of car ownership.
  • Ridesharing cost is hard to estimate: The final problem is that ridesharing costs are difficult to estimate.  Unlike taxis that have a flat fee per mile, ridesharing cost varies depending on several factors. This means that, if a person routinely used the service when the cost is down, they would have a lower cost per year than someone using the service at peak times. 
  • Ridesharing Discounts: The more you ride, the more discounts you receive, sometimes even up to 25% off rides. Those that give up car ownership are going to ride the most; therefore, they get the most discounts.  The study was based on paying “list price” or full price for every ride.

However, the study does make some points that ridesharing might not always be the cheaper alternative.  So, if you want to know if ridesharing would decrease your transportation cost, park your car and try it for a month.  Keep track of your costs and compare them to using and maintaining your own vehicle. 

Traffic Congestion

One argument against Uber and Lyft is that, even if they reduce the total number of cars on the road, they increase the number of car miles being driven, thus increasing traffic congestion, pollution, and other problems.  Opponents believe that they are dissuading people from using mass transit and increasing rather than addressing transportation issues.

A study done in July 2018 by Schaller Consulting that looked at the impact of ridesharing found that Uber and Lyft added 5.7 miles of driving in the nine largest metropolitan areas.  Part of the cause is that ridesharing drivers needing to drive from drop off location to the next pickup location.  The other reason is the decrease in the use of buses and other forms of mass transit at the same time. 

The idea that ridesharing is reducing the number of cars on the road has had mixed data.  In May of 2017, a Reuters/Ipsos poll found that only 9% of people who sold or traded in a vehicle last year did not get a new car because they were going to be using ridesharing.  Many of those using ridesharing moved from mass transit to ridesharing, increasing cars on the road and miles driven.

60% of people would have used mass transit rather than a car if they had not used the app.

Response to Criticism

Uber disagrees with the criticism, stating that it ignores the benefits provided by their service.  For example, in New York, the demand was mostly in areas that were not accessible by subway, and in Manhattan, demand fell following a new subway line being introduced.  Uber has also shown that they are growing in areas with no other options besides owning a car, like rural areas. 

Lyft showed their disagreement by pointing to research that ridesharing services fill in gaps left by public transit in urban areas.  Lyft stated that ridesharing could be the key to helping people in underserved areas get to and from the nearest transit stop with first and last-mile partnerships.  By partnering together, ridesharing and public transit could better serve the needs of everyone.

The number of miles driven by personally owned vehicles still far exceeds the number of miles of for-hire vehicles, which includes taxis, limousines, and ridesharing vehicles.  Uber and Lyft also contend that some of the rises in car ownership are not a result of their services but rather a result of a growing economy and falling gas prices that are making owning a car more affordable.

Considerations

The decision to own a vehicle or using ridesharing is unique to each person.  When considering the decision to ditch your car and rely on ridesharing, there are several important factors to consider:

  • City Make up: Ride sharing offers the most opportunities in large metropolitan cities, such as Los Angeles, Seattle, New York, or Boston.
  • Commute Time: The shorter the commute in miles, the better financial value you get from ridesharing.  However, the longer commute in time, the more time you save if you can engage in productive activities during the ride.
  • Cost of Current Car:  The higher the cost of your car, the more likely you will benefit from ridesharing services.  Registration and taxes on your car also impact the cost.
  • Loss of Control: As a rider, you no longer have control over the speed or the car, how long it takes the driver to arrive, and you can’t just jump in your car and go somewhere. 

Ridesharing will most likely benefit you if you drive less than 10,000 miles a year, face lengthy traffic delays, and place a high value on your time spent driving.  The efficiency of your vehicle and where you live will also play a role in your considerations. 

What it Means to go “Car Light”

Car light means that a household has fewer cars than working people or people with driver’s licenses in the household. In these households, one member would use a ridesharing service or other transit options as their primary mode of transportation, while the other person primarily uses the car. 

Having one car makes things like family vacations, transporting small children, and grocery shopping easier.  It would not eliminate car ownership, but it would reduce it.  This plan has many of the same pros and cons of eliminating car ownership, with the added benefit that one car is always quickly available

Other Alternatives to Car Ownership

It is highly likely that car ownership will continue to decrease as people use a variety of services to replace their car depending on their locations, the distance and purpose of the trips, and other options available.  These options will likely allow people to replace an existing car and prevent other people from buying one to begin with.

Car Membership Services

The shift away from car ownership increases when car-sharing services are also considered, such as Zipcar and Car2go.  These services focus on allowing members to reserve a car that they drive themselves.  Users typically pay per hour and may have recurring membership fees.  The idea is that you only pay for using the car when you need to use it.

These services are an alternative to ridesharing that some people like because they do not have to get into a car with a stranger.  It also gives the driver more privacy for trips and makes running errands easier.  Imagine trying to get two toddlers, groceries, and a dog from the vet all in one rideshare.  It also means the car is always available on demand.

Bike/Scooter Use

Riding a bike has always been an alternative to driving.  With the growth of bike-sharing systems, bike lanes, and bike rentals, there has been a rise in cycling from place to place.  Not only does it reduce car ownership and congestion, but it also offers other advantages. However, there are disadvantages, as well.

Advantages of biking include:

  • It’s cheap.
  • It’s a great exercise.
  • It’s faster than walking.
  • It decreases traffic congestion and pollution.
  • It helps to avoid getting stuck in traffic jams.
  • Bikes can go on paths that are not accessible by car.

Disadvantages of biking include:

  • It may be difficult to store the bike securely, especially in urban areas.
  • You have to lock up the bike to reduce the chance of theft.
  • There is a cost to buy and maintain a bike.
  • You may arrive at your destination sweaty and tired.
  • The weather impacts your ability to ride the bike.
  • It is slower than taking cars.

Bike-sharing companies and public bike systems offer an alternative to private ownership. This can allow a person to use a bike without having to incur the cost or deal with storage and theft problems.  However, it does not fix the problem of arriving sweaty and dealing with weather, and they are a very short-range option. 

An electric motorized scooter, called an e-scooter, can solve some of the disadvantages of bike use.  A scooter sharing system allows for short-term rental.  E-scooters are often “dockless,” meaning they do not have a fixed home location and can be picked up and dropped off from various places in the service area.  They are one of the least expensive short distance options.

Public Transit

Many major cities have invested heavily in increasing and improving their mass transit. However, in other locations, public transit is not well-funded and is often seen as “less than” using a private vehicle, whether personally owned, leased, or rideshare.  This, in part, explains why some riders move from public transit to ridesharing.

Public transit can offer some major advantages when it is well-designed and funded, such as lower pricing, safety factors, and decreased congestion and pollution.  However, it does come with disadvantages, especially when not well-funded, such as being dirty, having increased transit times with changing buses or subway trains, and less convenience.  Besides, public transit is not always available.

Combine Services for Savings

Most people are likely to find using a variety of services the best solution to going car-free.  Using a ridesharing company is likely to be part of their overall plan, but if they are truly going to save money, it will probably not be their only source of transportation.  Keeping one car per family and using public transit, bicycles, or electric scooters at times will reduce the cost of ridesharing.

Car memberships can also supplement ridesharing for longer drives, such as weekends away, vacations, or regularly scheduled drives.  The key to car membership is to use it enough to justify the annual membership, which is about $70 a year.

Final Decision

Ridesharing will not be the end of car ownership anytime soon, especially in rural areas where the option does not exist or is scarce.  However, many people have found great financial savings when they have opted not to replace their current car and rely solely on either ridesharing or ridesharing combined with a variety of other options.

Over time, it is likely that ridesharing, when used in conjunction with other alternative forms of transportation, will contribute to the current decline in drivers.  It is more and more likely that households will become “car light” but potentially not car-free. 

Ultimately, the final decision regarding car ownership is up to each individual.  Ridesharing will not work for everyone or in every location.  It depends on the amount that you drive, the distance and time of your commute, and the availability of rides in your area. 

Dan Ferrantelli

I'm Dan Ferrantelli. I discovered rideshare through my wife and daughter who used the service a full year before I decided to try it. Now I am a part-time Uber & Lyft driver and love sharing my experiences with others. I'm also an entrepreneur who has developed several businesses and I have a passion to write! I hope you enjoy the articles I post. Kind feedback is always welcome.

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