With Uber, Lyft, and other Ridesharing companies on the rise, using an app to get from point A to point B has become the go-to for Millennials and people all over the world. Seeing how popular ridesharing has become and how the growth of ride companies has permeated into every corner of our economy, it is evident that this is now a prevalent component of our society.
The Ridesharing market is one of the most rapidly expanding areas in the US economy today and stands to push car manufacturers and traditional taxis to the sidelines.
This means that traditional cars and insurance companies will be forced to innovate or die.
The ridesharing market could very well take over the car manufacturing industry in the next twenty years. With the transportation process being automated, many people will no longer need to own cars. This could put entire dealerships out of business, and thousands of people out of jobs.
How is this possible? With the rise of Uber, Lyft, and other ride-sharing companies, traditional car and insurance companies will need to do something drastically different if they want to survive. In fact, Uber has shown that using their ride-sharing feature called Uber Pool is less expensive and more convenient than owning a car – in the short term and long term.
Travis Kalanick, CEO of Uber, has said this “Intention is to make Uber so efficient, cars so highly utilized that for most people it is cheaper than owning a car.” Uber’s initial service was to provide users with an on-demand taxi service, in which users can request a “taxi” at their location, and have a driver show up promptly. Now, with Uber Pool, users are able to share these rides, splitting the cost with other riders who are going in a similar direction, thus lowering the cost for all passengers. In the near future, Kalanick says that Uber will probably include driverless cars. When they do, they will be potentially be replacing the drivers with the cars that operate themselves. Google is already developing their own driverless cars.
With this technology, Uber plans to successfully implement on-demand rides that are more efficient, easier, and cost effective than any scenario involving car ownership. Car ownership comes with many fixed costs, including maintenance, repair, gas, insurance… the list goes on. With Uber’s developing technology, the costs for the vehicle will be paid for by the hundreds of riders who use it. The vehicle will thus be operating under maximum efficiency and usage. Not only could Uber take over the car manufacturing industry, but they believe that driverless cars could end the car insurance industry. Within the next several years, between ride sharing and self-driving cars, the millennial wave will bring in a new wave of transportation experience.
This not only has implications locally, but abroad, as well. Based in San Francisco, CA, Uber operates in more than 300 cities globally, and is one of the best-known icons in transportation technology. Uber continues to innovate and hopes to compete with car manufacturing companies. Also based out of San Francisco, CA, Lyft is the second most popular transportation app in the area. It currently works out of 65 cities in the US, with plans to expand. Lyft’s rates are similar to Uber’s: a $2.40 base rate, $1.85 per mile, and $0.30 per minute. Lyft’s “safe ride fee” is higher, at $1.55. It’s cancellation fee is also $5. Lyft’s Prime Time pricing entails a fee that is three times its standard fare rate, at maximum.
Non-domestic ridesharing companies are getting in on the action as well. There has been an increase in the popularity of international ridesharing companies like Blacklane, Via, and Gett. Based in Berlin, Germany, Blacklane currently operates in 50 countries. Blacklane’s pricing model entails a set fixed rate depending on the day, time and date. Then, Blacklane makes the ride available to the driver to accept, first offering a lower rate which increases over time. Thus, the company profits based on the difference between the accepted rate and charged rate, minus any applicable taxes. Via is headquartered in New York City. The company promotes itself as a cost effective alternative to subways and other forms of transportation. Via is known for its quick pick up times – usually 5 minutes or less. If you pay “on the spot,” Via charges a flat $7. If you pay with its pre-paid debit card, the fee is only $5 per ride, in addition to tax. Gett is an Israel-based company and operates largely in New York City. One of its main appeals is that it offers a flat rate between any two given points in the city. The rates are stated before the ride, so that the passenger knows what the cost will be. This makes them stand out from other ride-sharing companies, who prices are indicated either during or after the ride.
While rideshare comapnies are obviously providing a service that was clearly needed, the long-term effects of this shift in transportation might also have a negative impact as well.
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