They collectively, i.e., all riders, but if there are 20 riders a day, each only needs to pay for 1/20th of a day’s depreciation.
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If there are 20 different riders a day then the car is going to accumulate mileage and wear and tear, and will depreciate much more than one which is used once or twice a day as a personal car.
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But with 20 riders, each day’s depreciation is also 20x what it would be for a single rider. Actually more, since there’s deadhead miles.
Again, carving up the depreciation among multiple riders - as opposed to a single passenger-owner - doesn’t reduce the amount of depreciation. It all has to be paid for. The cost of the ride in TaaS will include charge for depreciation that is at least as much as the depreciation would have been for that ride if it was a self-owned car.
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Some depreciation happens by the mile, but other depreciation happens just sitting in the parking spot. The later is spread among the riders.
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No, see above. A lot of the depreciation is spread.
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No, it isn’t. The entire cost of the depreciation has to be paid for. If twenty riders each own their own car, you have twenty cars that depreciate over 20 years. If they share, you have twenty riders that share a single car that depreciates to nothing in one year and has to be replaced every year. Either way, you’re replacing twenty cars every twenty years. The depreciation is the same - each car depreciates from $X to $0 over the life of the car.
All that changes is the size of the fleet. Instead of having twenty cars for twenty years, you have one car through twenty years. The depreciation expense doesn’t change, but the financing cost changes. If the purchase price of the car is $50K (chosen arbitrarily to make the math easy), instead of carrying $1M for twenty years you’re carrying $50K for twenty years. That’s a real savings - probably $0.20 per mile - but one that’s probably eaten up by the deadhead miles and other expenses.
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It eventually reaches a point, after a certain number of miles, where there is zero depreciation.
AI:NYC taxis, including the Crown Victoria, typically clock significant mileage due to the demanding driving conditions.
It is common for retired Crown Victoria taxis to have over 500,000 miles on the odometer, showcasing their durability.
EV have less moving parts so less maintenance. There is the question of EV battery life span. It seems they have the potential of lasting 500,000 miles also.
And the robo-taxis EV is much cheaper to operate than an ICE vehicle.
Tesla Model S and X batteries typically retain 90% of their original capacity after 200,000 miles, while Model 3 and Y Long Range versions retain approximately 85% of their capacity, with some lasting well beyond 300,000 miles
- Tesla Model 3: Offers a range of 267-325 miles on a single charge, with an estimated battery lifespan of around 300,000 to 500,000 miles.
- Tesla Model S: Provides a range of 373-405 miles per charge, with a similar battery lifespan of approximately 300,000 to 500,000 miles.
- Tesla Model X: Delivers a range of 325-373 miles on a single charge, with the battery expected to last between 300,000 and 500,000 miles.
- Tesla Model Y: Features a range of 277-315 miles per charge, with an estimated battery lifespan of around 300,000 to 500,000 miles.
There are lots of claims here about “this equals that” and other sweeping generalities, but no data to support these claims. Admittedly, it is hard to have data now on the future vision, but many aspects of these situations have current parallels.
That’s right!
That’s why I was very happy to find someone who was bad at arithmetic to pay the first $40,000 in depreciation on my 2020 Tesla Model Y.
That was one insight I took from “The Millionaire Next Door” a best selling book from 30 years ago. The wealthy people in the author’s sample seemed to avoid new cars and favored unpopular brands with good quality and reliability that depreciated faster than similar vehicles. They would then buy them as a 2-3 year old used car, and drive them for years. Nissan’s premium Infiniti brand seemed to fit the bill in the mid-late 1990’s when the study was done.
Once I looked at the economics of that, it was used cars for me from then on.
intercst
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It’s not really a “data” issue. It’s just basic economics. If there’s a company that purchases a car for use in TaaS, it has to charge the riders enough to cover the depreciation on the car. Since fleet cars are likely to be “burned through” in a pretty short period, the car company’s going to have to charge enough per ride to cover the depreciation of that car down to near-zero in a very short period of time. You can’t avoid the depreciation of the asset simply by changing who owns it - and speed-running the depreciation down to near-zero doesn’t avoid depreciation, it just hastens it.
If you buy a new car, it will likely lose about 50% of its value in the first three years almost regardless of mileage, and the remaining 50% of its value over the rest of its useful life as it is driven into the ground. That doesn’t mean that if you could put 250K miles on a car in just one year it will still have 30% or so of its value left by avoiding the time depreciation. You’re still depreciating it to zero - the fact that you compressed it into a year or two doesn’t “save” you from any time depreciation because it’s such a short time period.
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But, for one thing you are assuming that EVs depreciate like ICE. So far, they have been worse than ICE because of falling prices for new cars, That will stabilize with time and then it may turn out they depreciate more slowly, particularly with respect to mileage since they may be inherently long lived.
It may, but I wouldn’t count on it. The end-of-life of a rental vehicle isn’t that it wears out the engine or the transmission or any mechanical part, really. It’s the inside, where the passengers and drivers live. You can clean it up, of course, but there are inevitable nicks and tears, smudges on the plastic dashboard, whatever.
This would be especially true, I think, for a fleet car as opposed to a privately owned automobile where the owners cares abut such things.
[“Depreciation” as two meanings here and I think we’ve been mixing and matching. One is the accounting rule and the other is the more general “the thing won’t look shiny & new anymore”, which affects its value both for resale and for customer use.]
TaaS opens up the landscape by effectively providing fractional car ownership.
I can see many families reducing the number of cars by one. How many times is every car in the family in use? Most families I know have enough cars to handle the rare event where everyone drives at the same time. They could easily use TaaS rather than buying that last car. Of course we can’t then keep all our crap in our own cars. Not sure how compelling that is against the cost of car ownership but it will be a deal breaker for some.
TaaS will also be a boon for the elderly and disabled. I hope it gets here in time for when I age out of driving. I already try to avoid driving at night.
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I’m not. Really, it just doesn’t matter how they depreciate. The point is that the TaaS company will have to pass along to the riders at least 100% of the depreciation of the various cars. Changing who owns the cars doesn’t change that fact.
It’s like the old joke about slicing a pizza - it doesn’t matter if you cut it into six or eight slices, you don’t get any more pizza. The amount of pizza remains the same. It doesn’t matter whether EV’s depreciation schedule is different from or similar to ICE’s - if a TaaS fleet car is burning through ~70-80K miles per year, it’s going to be completely used up in three or four years. And all of that depreciation expense will have to be recouped as part of the fare charged to drivers. Over the long run, it can’t be any less than what the depreciation would have been if the cars had been owned by individual drivers instead. If the car costs $50K (made up number), the total depreciation over the life of the car has to be $50K (minus perhaps some scrap value).
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Every time Dad takes the car to work, and Mom is left home with the kids. Coming out of WWII we had only one car, and Mom couldn’t wait until we could afford to have another.
Could she have gotten along without one if TaaS existed? Probably. Would she have wanted to? Not a chance. On the days she knew she needed it Dad had to carpool with a neighbor. On the days she didn’t know ahead of time and Dad had the car, she had to scrape around for a neighbor to take her, or not go.
Mostly she didn’t go - except in emergency. TaaS would have made a difference for sure, but I’m willing to wager she still wanted her own car, which she eventually got: a Rambler station wagon, which she drove forever until it was passed down to me.
I’m not saying the scenario of “no second car” won’t be a thing, just that it won’t be a huge thing. It will certainly affect some portion of car sales at the margin.
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@tjscott0 After doing ride share for a while in exurbia, you will begin to see repeat drivers. If you really like one or two of them, you could make an off-platform deal with them to drive you to some of your more regular places for a lower fee (because they would keep more of it since they don’t have to share with the platform). Of course, the downside is that any insurance (or other) coverage provided by the platform won’t exist in that case.
Depreciation is roughly proportional to use. Use it more, have more depreciation, use it less, have less depreciation. I know someone will argue that vehicles depreciate differently than that - that they also depreciate with time. And that is true, but it’s only true for a relatively short initial period. A car may depreciate by 50% over the first 4 years of use. BUT, only if it is used for 50,000 miles in those 4 years (average use) then it’ll depreciate by 50%, but if it is used for 150,000 miles during those 4 years, it’ll likely depreciate by more than that. And after the initial period, depreciation is almost entirely proportional to use. We just use “years” as a substitute for “use” because it’s easier to think that way.
Also, if there are 20 riders a day average per vehicle, then you (by definition) won’t have a vehicle available “at any time”, you will have to wait for one sometimes, because the other 19 people will be using it. This is doubly (or triply) true in exurbia.
Basically, if you use 10,000 miles a year, one way or another, you will pay for about 10,000 miles of depreciation. Plus whatever profit margin the business owner requires to remain in that business.
This is where I suspect TAAS will shine most brightly. That incremental family car can be eliminated. This has already begun to occur in/near cities. The “kids” often prefer to use rideshare services for their outings. And the parents often prefer to avoid the high costs of an additional car for the kids to use. And parents who think a little more deeply about it also prefer to avoid the additional risk that comes with that additional car (younger people tend to have more mishaps while driving).
It’s mostly not “no second car”, it’s more “no third car”.
It will depend a lot on the details, of course - especially the price. Is the cost of semi-regularly using the TaaS service markedly cheaper than self-owning? For some, certainly - but for many (if not most) people, it’s not going to be much of a price difference.
I suspect not. I’m in full family car mode, and shared cars would not work for me or my family - and certainly wouldn’t have worked when the kids were younger. If you’ve got kids, you need your own car where things can stay while you’re inside at your destination. Stroller, carseat/booster seat, “kid pack” with changes of clothes and snacks and whatnot for emergencies, sports equipment…all the things that have to come with you when you’re out with the kids that you are not going to carry inside with you while you run in for a quick bite between errands.
And once you have that self-owned car for the first X years of having kids, it becomes a relatively inexpensive second (or third) family car. Used cars are cheaper cars, with a relatively low financing cost - so there’s really very little savings to be had by switching to the TaaS once the kids are older.
Like Goofy notes, there will certainly be an impact. There will certainly be some non-trivial number of people who can let go that second car and just rely on TaaS. But not, perhaps, a large enough number to fundamentally change car ownership in the U.S.
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I live 4.5. miles from work (until our office moves at end of year, then it bumps to 12 miles). An Uber would cost me $26 per day to commute to work. $541 per month. $6,500 per year. Just to commute to work.
Sorry, TaaS as a money saver is ridiculous. The majority of people are not going to give up their cars. This is all (an expensive) pipe dream.
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Yep for you and most folks it is too expensive.
In 2 months I will be 75. I know my driving skills have deteriorated since age 16. So I’m looked into what Uber & Lyft would charge for library, grocery runs, doctor appts.
I plan to remain in my exurbia home. It will close to a wash for the necessary trips.
In 2025 there are only 4% of the US population 75 and above. 2035-10.9%. 2045-12.5%
And then there are the disabled. So there may a role for an autonomous robo taxis service that would benefit millions of people.
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I think it might be helpful to keep separated two related but distinct questions:
- Will there be autonomous vehicles?
- Once there are autonomous vehicles, will they continue to be primarily owned by individuals or primarily used in a TaaS system?
There’s no doubt that AV’s will be enormously valuable to people who have difficulty driving. But that’s a separate question from whether those people will be a huge customer base for TaaS or for instead owning their own vehicles that are autonomous.
I offer the example of my elderly mother, who is confined to a wheelchair. My parents’ car is a specially adapted van with a retractable ramp, removed rear bench and a dock that her wheelchair locks into. She would 100% be a customer for an AV, but would be highly unlikely to ever use TaaS - because she needs that specific vehicle for her needs.
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