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Uber vs. Car Ownership

blog.samaltman.com

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Re: Uber vs. Car Ownership

#61

Post by lutorm »

crabasa wrote: post #29
AVTizzle wrote: post #24

Earlier quoted context omitted.

Sam's post has little to do with the emotion of "loving to drive." It's a calculation about the cost of car ownership vs. taking alternative means of transportation.

> This of course leaves out the huge intangible of how much nicer it is not to drive... I'm simply saying that it's often quite nice to drive, as Sam knows quite well as the owner of a Tesla Roadster.

On the other hand, quite often, if you live in the Bay Area or LA, it's also a complete disaster to drive... I also like to drive, but not in stop and go traffic on a freeway...

Re: Uber vs. Car Ownership

#62

Post by icandownvote »

I have to be driving less than 7000mi/year for Uber to make financial sense over my Model S P85+.

Let me repeat that: from purely economical perspective, if driving more than 7000 miles/year, Tesla Model S P85+ is cheaper than Uber.

Here are the numbers. Basic assumptions:

    gas : $4/gal (don't know if it's even a valid number anymore)
    power: $.1/kWh
Tesla Model S P85+:

    depreciation: $1/mile + $300/month (the $300 per months is a sandbagging factor, in reality it doesn't exist)
    power: $.033/mile
    maint: $600/year covers everything
    tires: $1600 (P85+ goes through the full set once a year, depending on how you drive)
    registration: $60/year
    insurance: $600/year
    parking: $300/year (suburbia, I hear you say. yeah, that's right)
    ---------
    7000 miles => $13993
Uber:

    7000 miles => $14000
For comparison: My old BMW M Roadster (yr. 2000, ~100K miles on the clock):

    depreciation: $1500/year
    gas: $1470 for the 7K miles
    maint: ~$2000/year (it's old)
    tires: $1000/year (chews through one set of good, soft tires. I like fast corners)
    tabs: $100/year
    insurance: $600/year
    parking: $300/year
    ---------
    7000 miles => ~$7000

Re: Uber vs. Car Ownership

#64

Post by sien »

sama wrote: post #3

this is not worthy of HN and the concept has been touched on many times here. i only blogged it because it was too long for a tweet and i wanted to reference it in a discussion. please don't upvote.

It was an interesting comment you made in your Econtalk podcast which was really very good.

The point could be taken further to work out how much people spend on average on a car and at what point they would get rid of their car.

Possibly for general use it is more applicable to self-driving cars than Uber but it's still interesting.

Re: Uber vs. Car Ownership

#65

Post by mikeash »

tdicola wrote: post #35
recalibrator wrote: post #19

Sam. You own a Tesla Roadster, a car for people who don't have to niggle over money. Most people a) don't live in SF b) have your money c) have access to Uber and d) have a Tesla Roadster. You're essentially talking to yourself and a few choice friends who live in the same bubble as you.

Not to mention since the car is paid off/owned outright the calculation doesn't take into account the price of the car. I would wager a majority of car owners are financing or leasing their cars and pay a monthly cost to do so. I guess depreciation kind of counts in his calculation, but it also applies to financing a car. Adding this cost would actually help his argument.

Depreciation is the ongoing cost of the price of the car. Depreciation applies to financing a car too, but you don't count it in addition to your principal payments. Quick smell test: if you finance a $25,000 car, by the time you've reduced the value to zero it will have depreciated $25,000 and you will have made $25,000 in car payments on the principal, but you will not have paid $50,000 total, you will have paid $25,000 plus interest. Depreciation is ultimately just "take the price of the car, average it out over time" with potentially some games to take into account the nonlinearity of the curve.

I'm not sure if $5,000/year is right, though. The car cost at least $109,000 new and probably more. At that rate it would take 21 years to fully depreciate, but the average life of a car is more like a decade. It's nonlinear, but the car is at most six years old. I think this may be an underestimate.

While we're at it, I'm struck by the maintenance figure of $3,500/year. That's a big pile of cash! I had a (much more boring, plain old gasoline) car of similar age until last year and the yearly maintenance on it averaged well under $500 and I drove it twice as many miles per year. I don't know enough about the Roadster to say whether that's correct or why it would be that way, but it reinforces that this is a highly unusual calculation whose numbers will apply only to a tiny number of people.

Taking a quick whack at the calculation for myself, I currently do around 8,000 miles/year, insurance is about $1,000, maintenance is $28 (preventive maintenance is bundled in the price of the car for another year, and nothing should break, so I'm just on the hook for the state inspection), depreciation is, somewhat wild guess vaguely informed by my perusal of the used car market last year, maybe $2,000, parking is zero, and my cost per mile is about 8 cents. (Amusing side note: I did that last calculation with Google and it defaulted to giving me the result in dollars per meter.)

Putting it all together, and I have about $3,000 in fixed costs and $640 in per-mile costs, so $3,640/year total for ownership. At $2/mile, UberX would cost me $16,000/year for the same distance driven, about five times the cost.

Re: Uber vs. Car Ownership

#66

Post by mikeash »

cjbarber wrote: post #46
recalibrator wrote: post #19

Sam. You own a Tesla Roadster, a car for people who don't have to niggle over money. Most people a) don't live in SF b) have your money c) have access to Uber and d) have a Tesla Roadster. You're essentially talking to yourself and a few choice friends who live in the same bubble as you.

To be fair: It seems like Sam wrote this in response to queries after he posted this tweet "just did the math. it's now cheaper for me to get rid of my car and uber everywhere (gas, parking, maintianence, insurance, depreciation) ." And then he posted the calculation on Twitter.

That would be fine if the article was just about his personal costs. But it's not. The last paragraph makes it clear that he thinks this calculation applies to enough people to make a difference of billions of dollars in Uber's valuation.

Re: Uber vs. Car Ownership

#67

Post by mikeash »

btilly wrote: post #45
dsil wrote: post #34

Earlier quoted context omitted.

Hold on, what you're missing is the last part of the essay, the difference in value of time spent driving vs time spent riding an Uber. Say you averaged going 45mph. Then your 9000 miles took 200 hours. And you'd spend $4000 extra to use Uber, so not having to drive would cost $20/hour. Depends how you'd use that time, but for many it would be well worth $20/hour to be able to do other things, like bill hours.

And if you're prone to motion sickness, like I am, then the value of that time you get back is approximately $0.

Quite possible negative. For many people it can easily be a net negative to be driven around rather than driving one's self simply in terms of how you feel afterwards. All else being equal, I'd prefer to drive than be driven. Sometimes not all else is equal, like parking is hard, or I'm taking a trip and need to leave the car for the wife, and then I take a taxi or Uber or something. But I would assign a value of something like $50/hour to not being in a taxi/Uber.

Re: Uber vs. Car Ownership

#68

Post by prewett »

eurleif wrote: post #59
dragonwriter wrote: post #55

Earlier quoted context omitted.

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.

I would assume it is capital cost for developing the autonomous car.

Re: Uber vs. Car Ownership

#69

Post by yazaddaruvala »

While this is very specific to 20+ year olds, Uber has allowed me to lower my rent significantly.

Being in my early 20s I frequent bars often. I like my car but I can't go to a bar in my car.

Previously, to accommodate my lifestyle I lived in downtown Seattle. This year I moved away, not very far, a 30-40min walk, and am saving about $1000 a month. According to Mint I've only spent $150 (about $6 a ride) on UberX this month.

Re: Uber vs. Car Ownership

#70

Post by calvinbhai »

Its definitely cheaper because

1) UberX is covered by personal insurance, drives a lot of other people around (hence the cost is shared over many rides).

Your personal car also is covered by personal insurance but drives only "you" around.

Of course, UberX has an insurance advantage!

2) UberX driver is doing it part time, so he/she certainly has a lower paying job (~minimum minimum wage) or no job at all, at which point, the UberX driver's hourly rate is wayyy less than that of a Silicon Valley techie.

3) Since an UberX waiting for a passenger is probably idling somewhere or is driving around the high density of pickups area, the vehicle, technically is not required to pay for parking at any point, but if you driver your own car, you have to leave it somewhere, and pay for the parking (at work, and in SF, at home too).

Bottomline: UberX can be (strike that), will be cheaper than owning and operating own car once Uber + autonomous vehicle becomes a reality.

why?

1) Insurance: Less human error --> Lower premium

2) No need to pay a driver: 50% of UberX price goes to pay the driver (assuming 30% costs, 20% Uber commission). If Uber just keeps that 20% of commission, and costs remain the same, the fares can go down an another 50%!!!!

3) More people moving to autonomous UberX will lead to increase in premiums for manually driven cars (Insurance company has to make profits!).

Until this Autonomous UberX happens, all other explanations of UberX is cheaper than driving, needs to be taken with a pinch of salt

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