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Uber vs. Car Ownership

blog.samaltman.com

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Re: Uber vs. Car Ownership

#51

Post by tdicola »

As a counterpoint I bought a car for about $3000 4 years ago and have put a bit over 40k miles on it. Maintenance, insurance, registration, etc. have added up to about $7k (you don't need full coverage insurance on a $3k car). Fuel costs are about $10k (13 miles per gallon at about $3.30/gallon). Total cost of ownership is about $20k.

An uberX at $2.00/mile would have cost me $80k.

I could have bought 4 cars and driven them the same mileage for the price of uberX. I've been able to drive this car deep into the cascades, olympic peninsula, etc. for awesome camping trips--something uberX would never let me do. I also never worry about parking on the street because, hey it's a $3000 car who cares?

edit: Car is a '99 Jeep Cherokee if anyone cares, with over 180k miles on it now (and should easily go to 250k+ miles with regular maintenance).

Re: Uber vs. Car Ownership

#52

Post by gamblor956 »

vacri wrote: post #37
gamblor956 wrote: post #30

Earlier quoted context omitted.

Uber is only cheaper than driving yourself around if you points of comparison involve low-mileage use cases, a high-density area, an expensive car, and expensive gas. In other words, a wealthy individual who lives in San Francisco, New York, Chicago, or LA. For everyone else, Uber is far more expensive than owning their own car.

LA isn't a high-density area - it's very spread out, with lots of low-medium density housing. How is Uber doing in LA, I wonder? Just watching it here on HN, you could be forgiven for thinking it was SF-only (due to the demographics of the site)

The LA metropolitan area may not have as high a density as SF, NY, or Chicago, but that's primarily because it's several times the geographic size of those metropolitan areas and includes lots of uninhabited space. Many parts of LA are just as dense as similar areas of SF, NY, or Chicago.

Te type of customers who would use Uber in LA live in the high-density areas (generally K-town, Hollywood, West LA, and DTLA), and Uber does well in those areas. For anyone living in the low-medium density areas, i.e., the suburbs, Uber simply isn't economical.

Re: Uber vs. Car Ownership

#53

Post by sliverstorm »

ewindisch wrote: post #36
7Figures2Commas wrote: post #26

Earlier quoted context omitted.

> Uber will eventually work just as well in suburban areas. No, it won't. > The fundamental economics don't change... They don't change for Uber, but they do for drivers. > It will take longer to get to penetration levels that result in sufficiently high utilization. You seem to be under the belief that supply drives demand here. That's not the case. The economics of utilizing a taxi service can be markedly different…

> > Uber will eventually work just as well in suburban areas. > No, it won't. Perhaps it doesn't work "as well", but I live in a very-much suburban area that borders on rural. I know several farms from which where one can consistently get an UberX with a 5-10 minute wait.

There are other ways in which it needs to work.

For example, the further you travel, the more important cost per mile becomes in deciding car vs. Uber. As with every other own vs. rent discussion, the more you use something, the more compelling ownership is.

Re: Uber vs. Car Ownership

#54

Post by foobarqux »

alooPotato wrote: post #31
7Figures2Commas wrote: post #5

> This calculation is why I think Uber is still undervalued. The people who say Uber is only worth $4 billion or whatever don't think enough about people like me who will go from spending ~$500 a year on taxis and car service to ~$12,000 now that the experience and cost have reached a tipping point. This is a lazy analysis. Are there folks who will trade car ownership or public transportation for Uber and services li…

"Are there folks who will trade car ownership or public transportation for Uber and services like it? Absolutely. But what is the size of that market? Literally everyone. Everyone needs to move around their city. The size of the market is the size of the total city scale transportation market which includes car ownership, taxis, public transportation, good walking shoes, pedi cabs......etc. How much of that market ha…

Expected future growth is priced in, the question is whether it has been mispriced.

Re: Uber vs. Car Ownership

#55

Post by dragonwriter »

icambron wrote: post #9
tesq wrote: post #8

Earlier quoted context omitted.

Why do you think the consumer will see any significant price benefits from automation instead of having the profits diverted to shareholders, executives or as reinvestments?

Because competition drives prices down until they're close to costs.

Automation isn't competition; in fact, it is a factor which increases capital costs in the industry, spurs consolidation and monopolization.

Re: Uber vs. Car Ownership

#56

Post by wj »

vacri wrote: post #37
gamblor956 wrote: post #30

Earlier quoted context omitted.

Uber is only cheaper than driving yourself around if you points of comparison involve low-mileage use cases, a high-density area, an expensive car, and expensive gas. In other words, a wealthy individual who lives in San Francisco, New York, Chicago, or LA. For everyone else, Uber is far more expensive than owning their own car.

LA isn't a high-density area - it's very spread out, with lots of low-medium density housing. How is Uber doing in LA, I wonder? Just watching it here on HN, you could be forgiven for thinking it was SF-only (due to the demographics of the site)

LA has some fairly high density areas.

I lived in Santa Monica, which wasn't too high density, but I recall that taxi prices were absolutely outrageous. Hopefully Uber has caused those to drop some.

Re: Uber vs. Car Ownership

#57

Post by hyh1048576 »

tdicola wrote: post #51

As a counterpoint I bought a car for about $3000 4 years ago and have put a bit over 40k miles on it. Maintenance, insurance, registration, etc. have added up to about $7k (you don't need full coverage insurance on a $3k car). Fuel costs are about $10k (13 miles per gallon at about $3.30/gallon). Total cost of ownership is about $20k. An uberX at $2.00/mile would have cost me $80k. I could have bought 4 cars and driv…

So you made a good point. If UberX can lower its cost to about $0.5/mile then it's way more competitive.

* Or UberX can be lucrative for people who doesn't need 10k miles per year.

Re: Uber vs. Car Ownership

#58

Post by 7Figures2Commas »

alooPotato wrote: post #31
7Figures2Commas wrote: post #5

> This calculation is why I think Uber is still undervalued. The people who say Uber is only worth $4 billion or whatever don't think enough about people like me who will go from spending ~$500 a year on taxis and car service to ~$12,000 now that the experience and cost have reached a tipping point. This is a lazy analysis. Are there folks who will trade car ownership or public transportation for Uber and services li…

"Are there folks who will trade car ownership or public transportation for Uber and services like it? Absolutely. But what is the size of that market? Literally everyone. Everyone needs to move around their city. The size of the market is the size of the total city scale transportation market which includes car ownership, taxis, public transportation, good walking shoes, pedi cabs......etc. How much of that market ha…

> Literally everyone. Everyone needs to move around their city. The size of the market is the size of the total city scale transportation market...

Your approach to market sizing is eerily reminiscent of Ali G's[1]. Amusing, but not credible by any standard.

[1] http://www.youtube.com/watch?v=nkuOuxRD1Bc

Re: Uber vs. Car Ownership

#59

Post by eurleif »

dragonwriter wrote: post #55
icambron wrote: post #9

Earlier quoted context omitted.

Because competition drives prices down until they're close to costs.

Automation isn't competition; in fact, it is a factor which increases capital costs in the industry, spurs consolidation and monopolization.

Google isn't the only company developing autonomous cars. Multiple car companies have own working prototypes. So it doesn't look like there's any monopolization of the technology itself. It seems likely that the capital cost of an autonomous car will be roughly comparable to the capital cost of a normal car.

Re: Uber vs. Car Ownership

#60

Post by bigfoot13442 »

I did some back of the napkin math of my own and this is way of base. I don't live anywhere even close to somewhere that uber operates so it doesn't really matter but it made me think, "am I really spending that much on owning a car?" The per mile number is what got me so I came up with a number myself and I'm way closer to $0.50 per mile.

I have a Chevrolet cobalt that I bought 5 years ago for $6000. I will have this car until it dies so depreciation isn't really a factor. Instead I just divided $6000 by 5 years. I live in Canada and gas here is the equivalent of about $5.29 per gallon. It's been a good car and has only cost me about $2000 per year in maintenance (I do some minor stuff myself). Factor in registration, license, insurance and at 12000 miles per year at my measured fuel efficiency, I come in at a little less than $0.50 per mile.

If it was going to cost me $2 per mile I think I would have to just stay home.

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