Age and use contribute to depreciation - which is why mileage (and the condition of the vehicle, not just its age) is such an important part of determining the value of a used car. But your MaaS provider is going to be experiencing much of that “time” depreciation as well (as you point out, the first 10% comes in the first moments of ownership, which the MaaS provider will experience more often than an individual buyer). There’s going to only be a small amount of “time” depreciation savings to spread around - much of it will get eroded by the “harder usage” increased depreciation of having lots of unsupervised non-owners using the car.
I fully concede that if people use their cars the way most people use planes - only a handful of trips per year - then MaaS will absolutely make sense for them. But almost no one does. Nearly everyone who owns a car will use their cars more than a few times per year.
Not only is the MaaS vehicle likely to cover a lot more miles in any given time period than the privately owned car, I’ll be the insurance rate will be higher for a vehicle used for large numbers of disparate riders.
Yes, it does. Otherwise, the business would not be able to survive.
Purchase price: Retail vs production cost = HUGE price difference. In addition, the retail version of a vehicle is FAR less durable than would be an industrial/commercial version of the same vehicle. Plus, the commercial version of the vehicle would have a far longer expected usage life because it was designed for that purpose. Vehicles that are designed to be produced for only 1-3 years (made and sold to retail customers) have a far shorter average useful life than a vehicle designed for 15-20 years of service with ongoing maintenance. Business is allowed depreciation on ALL its assets, including vehicles owned. Individuals are NOT allowed to take depreciation unless the vehicle is used for a business purpose. Hint: A relative was a manufacturers’ representative for OEM auto parts. His territory was Minnesota through Montana. He did 30+k HIGHWAY miles per year in that territory and he bought a new car (higher-end Oldsmobile or Buick) every 3 years or so. The dealer LOVED him. Guess why.
Insurance costs: An individual insurance policy depends on a variety of factors, but the insurance company has to cover tens of thousands of INDIVIDUALS and VEHICLES = $$$$$$$$. A commercial insurance policy, per vehicle, is far less expensive. Plus, the MaaS operator has to essentially be able to PROVE to the insurance company–AND THE GOVT–their MaaS vehicles will be significantly safer than a comparable number of non-MaaS vehicles. Otherwise, why would the public bother with MaaS? SAFER = LOWER COST OF INSURANCE (big $ savings there).
Space savings: If you don’t have to park, then you don’t have that cost (anywhere). No parking expenses. More house because less required protected parking at home for that valuable necessary vehicle. No parking tickets. No speeding tickets. No DUI/DWI costs. MaaS AVs do NOT need to be stored somewhere. The ONLY time they are NOT on the street is when they are being serviced and/or cleaned. With an EV, it can just sit (on the street is fine) and wait for a customer to summon it. While waiting, there is virtually no operational cost to the MaaS operator. Remember: “Wait time” is included in the overall system calculations. Vehicles will be used far less at certain times, so that “wait time” is included as a “cost of doing business”. Overall vehicle utilization/efficiency will be far higher overall, thus allowing the MaaS operator to offer better service at a lower price than a similar number of privately-owned vehicles.
Ride summoned similar to a Lyft/Uber, but one difference. Vehicles are positioned near where historic demand has happened, so they are usually already in the area–and it is just a few minutes to wait. Faster than walking through a parking lot, etc. There could even be dedicated fobs for each user. So no looking up stuff to call. Just hit the button and the info is sent–and you get back the vehicle ID and when it is expected to arrive. Vehicles will be located near shopping, etc–so, short wait times.
There could be other uses for MaaS. Dedicated vehicles designed to handle deliveries for stores or commercial delivery services (UPS, FedEx, USPS, local delivery for most businesses, etc). Guess how fast businesses could grow when their “reasonable delivery cost” territory is the entire MaaS network. Across town is no big deal any more.
Which is entirely a possibility. Or rather, as I suggested upthread, it might not be big enough to materially affect private automobile ownership. It certainly makes sense for people who live in dense central urban cores, where people that own cars might not use them very frequently and have to pay very high marginal costs for parking. But it might not be cost effective outside of those areas. MaaS may not end up replacing very many privately owned cars at all, because it might not be able to survive outside those limited markets.
None of your points really rebut that. If MaaS companies are separate from automakers, they’re not getting vehicles at production cost - the auto manufacturers will still want and need to earn a reasonable profit. If they’re part of the automakers, the requirement to get a return on their investment in production facilities doesn’t disappear - the cost of MaaS services will have to cover not just the cost of production, but incorporate some reasonable rate of return on all the factories and workers and whatnot. There’s just not that much savings available. Certainly there are probably a few percentage points of savings that might come from that - but I suspect that won’t be enough to cover the considerably higher costs of deadheading, storage, and vehicle maintenance/servicing.
For insurance, the cost of a policy to insure a vehicle that gets driven 70K miles per year is going to be much, much higher than the cost to insure a vehicle that gets driven 14K miles per year. Plus, as a commercial venture, there will need to be insurance against claims by riders against the company - and against the very real risk of property damage committed by riders against the vehicle (theft, vandalism, or just inadvertent damage).
As for parking - yes, MaaS vehicles do need to be stored somewhere. Very few people travel in the late of night (say, the 11:00 p.m. to 6 a.m. hours) - and those vehicles will need someplace to be charged overnight. And inspected, cleaned, and repaired as well. That’s not going to happen on city streets.
As for some of the other things you identify as possible savings, they’re not likely to result in anything material. Some just aren’t relevant - I’m comparing MaaS ownership compared to private ownership of cars that are also autonomous, so no one’s getting DUI’s any more regardless of which form of ownership they choose. Staging vehicles near high volume generators (like a shopping center) can save time for pickup - but they also increase your deadheading costs. Those deadheading costs are the principle reason that I think MaaS won’t be very widely adopted outside of dense urban centers - a 20-30% deadhead seems pretty likely, and that’s going to erode almost all of the potential savings that come from sharing a vehicle, rather than having the vehicle stay where the rider is at all times.
In all of this talk about MaaS, it dawned on me that MaaS isn’t anything at all new. It’s an old business - very old. It’s the taxicab business.
Yes, the current cutting edge thinking is that MaaS eliminates the driver. But that is the only real difference. People have operated fleets of taxis for decades. Pretty much everything else is the same. Vehicles have to be stored, maintained, be out in the service area for quick dispatch - all the same things a taxi does, just without a driver at the wheel.
Someone suggested that MaaS vehicles would be purpose built. That could happen, and there likely would be some, but most taxis over the decades have been just a plain ol’ production vehicle, perhaps with some customized set of options that isn’t available to the general public. Yes, there is the Checker Cab, common in NYC and elsewhere for decades. And the iconic London Taxi (or hackney). And even the Hansom Cab that goes back to the 1830s. But most taxis are just regular production vehicles, potentially with some fleet only options.
I was going to go dig up the financials of some publicly owned taxi company, but it appears that those are pretty rare if they exist at all. And before someone asks, Yellow Cab is privately held.
Aside from the potential savings in eliminating the driver, another savings is in the elimination (at least for now) of much local government licensing. One thing that taxi cabs can do is pick up a customer hailing them on the street. That service has long been regulated in the name of public safely (and, not incidentally, in the name of local grift. Greasing the palm of the person in charge of issuing taxi licenses is a far too common way to actually get a license.) This is how Uber and Lyft get around taxi licenses. They can’t pick up someone hailing them on the street, they can only respond to someone specifically requesting service.
Anyway, if you know how the taxi business works financially, you have the basis of how MaaS will work financially. It’s the same business with just a couple of tweaks. It’s not anything truly new. Just a new name on a very old business model.
Nice try, but you omitted the crucial point: A MaaS vehicle will have far fewer accidents than a privately-owned/driven vehicle. Fewer accidents = far lower insurance rates, even for a commercial vehicle. This is one critical area a MaaS operator will have to document as valid–to both the govt AND the insurance companies. Otherwise, there is no rationale behind using a MaaS system because there are no savings.
“it might not be big enough to materially affect private automobile ownership.”
By definition, the MaaS operator would have to reasonably believe (and be able to document) a movement FROM privately-owned/operated vehicles to the MaaS system. If that could not be done, then nobody invests–and there is no business. Thus, the business could only exist if that was believed by capable investors. I know this to be true because I have done a presentation for capital funding for a new venture. They offered some money (about 67% of what was needed, IMO), and I asked about the rest. Being under-capitalized is a common failure point for new businesses. No response, so I told them “no” for that reason. The person with me was not happy, and subsequently did something VERY stupid. He allowed the patent to lapse by not paying the final fee to USPTO (he had the money, so that was not an issue)–and the formerly patent-protected product was then available to the general public to make as they chose (with no licensing fees). He had NO clue about manufacturing, while I had come from a manufacturing background in multiple businesses using components made with the same machines.
“MaaS vehicles do need to be stored somewhere.”
Why? Recharge stations can be located anywhere on the MaaS system, so it makes sense to have them NOT be centralized. When they hit a certain point (say 35% power left), they automatically attach to the most convenient recharge station. Remember: The basic design will include FAST recharging because a vehicle can not be generating revenue if it is tied up at a recharge station for a long time. There will be clean-up facilities located at various locations in the MaaS system because that is a KNOWN ongoing cost (daily?) designed into the original system design. Maintenance and repair facilities would be on the network as well. Again, costs reasonably already built into the price of using a vehicle.
It is similar to a taxi system, but far more comprehensive. Taxis are not cost-effective for long-term use over time. A MaaS system is less expensive to use over the long-term because its intent is to replace one or more privately-owned vehicles with essentially public transit. Yes, the MaaS system can replace much of a public transit system. It could NOT replace long-distance commutes such as in NYC, where many workers come into the city for a relatively short time (8-9 hrs) and then return home on the second half of their long commute. It is not cost-effective to remove the subway and other underground transit infrastructure of one or two centuries ago. When those systems need to be replaced–if ever–then the examination will be “What exists today that can meet/beat the subway, etc?” That, of course, presumes there is even a need/demand for a replacement for those systems in the first place.
Why would a MaaS vehicle have far fewer accidents than a privately owned autonomous vehicle?
I didn’t say they needed to be centralized. I just said they needed to exist. You need places for the vehicles to be charged and cleaned - almost certainly daily. The MaaS provider will need to pay for that, and that cost will have to be passed along to the customer in some form.
Why? Uber/Lyft haven’t really materially affected private automobile ownership - but they’ve created a pretty sizable business, one that’s long been profitably occupied by taxies before them. There’s lot of room for MaaS businesses in that space, without significantly disrupting or dislodging private ownership of cars.
Don’t Uber and Lyft already do this as well? Certainly they tell drivers where surge pricing is in effect.
And drivers know when there is an event like a concert or sporting event and position themselves for this. The drivers also make their own decisions on where they might end up for their last destination to be nearer to their home – based on conversations I’ve had with several late night rides from an airport.
In any case, any predictive data that MaaS could do could also be replicated by taxis/Uber/Lyft.
It might cause fewer, but it won’t be perfect. So it will cause some. And it will still get hit by other human drivers on the road. Don’t think for a minute that a passenger injured in an accident won’t sue the MaaS company for their injuries. Both the MaaS company and the driver of the other vehicle will be sued, letting the lawyers and courts sort things out. Further, the MaaS company and their insurer will be seen by all as the “deep pockets”, so settlements in total may not be any less than for private ownership even if there are somewhat fewer wrecks. They could even attract nuisance lawsuits that will require at least some time from lawyers to deal with even without a settlement or a minor payoff to make the issue go away.
Somebody upthread mentioned that this business already exists, it’s “taxicabs” without the driver. Fair enough, except the vast majority of the country doesn’t have great cab service. New York and Chicago, certainly, but DesMoines? Salt Lake City ? Sure they exist, but you don’t step off the curb and find one, you call ahead, sometimes well ahead, and it comes to pick you up Maybe 10 or 20 minutes later. I submit that few are going to give up their personal car if that’s the case.
I can also suss out some costs by looking at another business: the rent a car business. Since I take it out with a full tank and bring it back with a full tank (or get killed on the cost), we can ignore fuel costs, and the cost-per-mile for a car rental company must cover their depreciation costs, repair costs, cleaning costs, maintenance costs, and all those other incidental expenses. And they already do fleet sales, so presumably they get some sort of price discount on a fleet purchase.
Anybody want to guess whether it’s cheaper to own your own car, per mile, or if it’s cheaper for Hertz or Avis or whoever to own a car, per mile? Not a perfect comparison, but personal rental wins in over 90% of the country (estimate), only where people are stacked up tall in high-rise or other apartment buildings does the equation change. And the rental company can’t have old, cruddy, dirty, or cars with knobs falling off, so they have the high depreciation years, while I can have an old car if I want, and ignore depreciation costs totally.
(If you’re arguing that “storage costs” for my cars is an issue you’re not thinking with a right head. I have a driveway. Everybody with a house has a driveway and we have two car garages throughout the land. “Personal storage” is not an issue. On the other hand, storage for ride-sharing vehicles costs money. I know; my condo in Boston used to rent a space to Zip-Car so it would be convenient. Lasted a year, in spite of having thousands of BU and MIT students living on our block, who one might think would be a prime target for such a venture.)
Of course. But the video recording of the accident will be definitive. And in most instances, another vehicle caused the accident. So the MaaS system will have expenses, but very few payouts due to a MaaS vehicle causing an accident.
They try but can get overwhelmed. A MaaS system will be able to quickly re-use a vehicle–or even offer discounts for multiple pick-ups going to the same (surge or not) destination.
That was my on my list of points to make, but I didn’t state it.
There’s an awful lot of the country that has little to no taxi service. Even if MaaS can end up being slightly cheaper than a current taxis to operate, it will end up making financial sense in only a few more places. Near me, LA has regular taxi services. But in Orange County, you only see taxis near the airport. Away from that general area, they’re a rare sight. Perhaps we’d see robotaxis in a slightly larger area around the airport. But probably not deep into the southern part of the county, where most things are more spread out in the rolling hills.
Of course, Uber and Lyft are probably more comparable to MaaS, and those vehicles aren’t emblazoned with all of the usual taxi stuff - ads on the roof, rates on the doors, company name on the trunk. So they’re harder to spot. And they’re in a somewhat wider area. But Uber and Lyft depend on hiring lots of people who are willing to work for next to nothing. I’ve done tax returns for a few drivers over the last several years. Rarely do they make even enough to pay their cash expenses, especially when you factor in deadheading.
I thought that MaaS might do a bit better, especially because they lose the cost of the driver. But when you see how few rideshare drivers actually make money at all and how few taxi drivers can survive on their wages, MaaS doesn’t sound like a great business to me. It will certainly exist in some places. But probably not much further than current taxi services are generally available.
That is an important consideration missing in your analysis. Whether ownership makes more economic sense than MaaS depends on how much the vehicle is being used. For the retiree who might use a car a couple of times a week the advantage goes to MaaS. The question is when does the advantage shift to ownership. That hasn’t been established.
Furthermore, where we are talking past each other is that you seem only to consider ownership by an individual so the issue becomes an all-or-nothing “Do I own a car or only use MaaS”. My perspective is from the POV of households, where the question is more about how many cars to own. On average, US households own two cars. I think as MaaS improves, it will increasingly challenge the necessity of owning that second car.
For most households, the work commute is the primary car use during the work week, the most predictable in terms of time and the least enjoyable to drive. That makes it optimal for MaaS. Even if the cost per mile is substantially higher than ownership it still makes economic sense because that MaaS cost is only for a fraction of the day while ownership costs are incurred 24/7 (a never driven Camry will still lose half its value in five years due to time depreciation). I think for many, if not most, households owning one car and using MaaS for the rest of their transportation needs will make the most sense.
In effect, MaaS provides the benefits of fractional car ownership. Many households don’t really need two cars, more like 1.5 in terms of usage. MaaS takes care of that fractional use.
That’s more than 10K per year on the typical commuting car just from the commute - and the overwhelming majority of those cars will also get some additional weekday and weekend usage. Sure, there will be some people that have a second car that they only use for a few thousand miles per year. But those vehicles make up only a small fraction of the fleet. And I suspect - though I couldn’t find any data - that those rarely driven cars are more likely to be older cars that aren’t experiencing a lot of time depreciation any more.
Sure, there will be some people who benefit from “fractional car ownership.” I just doubt that they will make up any significant proportion of people who currently own cars. They’re going to be folks that are currently using other modes. Indeed, one of the things that studies looking at the environmental impacts of Uber and Lyft found is that they didn’t pull people out of their existing cars very much, but did pull people out of non-automobile modes like biking and buses. Lyft and Uber vastly increase the total VMT in an area, because they deadhead so much and because they get people who currently aren’t using cars to start using cars for more trips.
According to the EIA in 2017, the 33% of 2-vehicle households average 22K miles/year with 15K miles coming from their primary car, leaving only 7K miles from their second car. Of the 23% of households with >2 cars, all categories had at least one vehicle averaging less than 5K miles. There seems to be a lot of low mileage vehicles in the 56% of households with more than one car. These are prime candidates for replacement by MasS.
I agree they’re prime candidates for replacement by MaaS - I just don’t think they’re “a lot.”
From the EIA report, about 63% of all cars are “first cars” (remember, about 9% of households have no car at all, so if we’re talking about percentages of cars, rather than households, we have to back them out). Yes, all of the categories with three or more cars had at least one vehicle averaging less than 5K miles. But all of those vehicles together are only about 10% of the total vehicles.
I wonder if we’re just disagreeing on what “materiality” involves. I can maybe see MaaS replacing about 10% of privately owned cars. That would depend on the extent to which all those people who have three or more cars decide to just lump the low-use car miles into their privately-owned first or second cars, rather than switch to an outside service. But I don’t think that would constitute a material departure from the predominantly privately-owned passenger car society that we have today.
The overwhelming majority of cars will continue to be privately owned - and and even greater majority of actual transportation will be in privately owned vehicles. MaaS will probably be a non-trivial, but still pretty small, slice of the passenger car sector. It’s not likely to displace car ownership as a general matter.
There are two markets: Cities and rural. Cities can support MaaS/TaaS. Rural areas can not (due to time, distance, low usage, etc). So there are two markets for vehicles–MaaS/TaaS for significant city transit and people having to drive themselves outside cities.
I agree with most of your points. A minor nit…the average is a poor stat to use here.The outliers at the high end skew the number. The median (half are higher, half are lower) is more like 25 miles. (Lots of PHEV makers discuss this in their marketing).
So the median distance is closer to 6K miles than 10K.
Another point though is that people buy and own cars for lots of reasons, many good reasons and many not. For example, they might want to be able to tow a boat one or two weeks a year. Or tow an RV. Or drive to the snow with skis. Are you really going to drive to the snow, in the snow in a car with no driver? Are you going to take your kids to soccer practice with bags of equipment (possibly muddy) in a MaaS car?
Not likely.
It doesn’t mean that people might not use a car service (with or without a driver) sometimes. They are just unlikely to give up their car(s) that easily for the things other than the commute. If you need/want to own it for other reasons you might as well use it to commute as well. We already have Uber/Lyft and people still have their cars (mostly).