Uber Car and the real cost of driving

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tc101
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Uber Car and the real cost of driving

Post by tc101 »

I was talking to an Uber Car driver last night. He said the driver makes about a dollar a mile driving, and that he was happy with that. He said that although the government allows a 55 cent a mile deduction for driving expenses, the real cost to him was only about 20 cents a mile. I think the real cost is probably much higher.

My question is about the real cost of driving, and the effect of uber car and it's competitors on the economy. If uber car drivers really do make a fair return at the current rates, I think there will be more and more of them, and more people will use them rather than their own cars. I am in Atlanta and I already know people who own cars, but choose to use uber car in areas where parking is a problem. I am 64 and my night vision is not what it used to be and I am considering using them more for night driving. If this really takes off I could see it changing the whole way we use cars. What are your thoughts?
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climber2020
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Re: Uber Car and the real cost of driving

Post by climber2020 »

I hope it continues to get more popular. I hate driving in general, but especially circling downtown looking for a parking space.
rec7
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Re: Uber Car and the real cost of driving

Post by rec7 »

Can you use an old car and be a uber driver? I am guessing insurance would be expensive.
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Re: Uber Car and the real cost of driving

Post by jlawrence01 »

rec7 wrote:Can you use an old car and be a uber driver? I am guessing insurance would be expensive.
I think that the car has to be no more then three years old.

The insurance will be MUCH higher than if you were not using it for a livery service. And by the way, you MUST inform the insurance company that you will be using your car as a livery service.
poker27
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Re: Uber Car and the real cost of driving

Post by poker27 »

tc101 wrote:I was talking to an Uber Car driver last night. He said the driver makes about a dollar a mile driving, and that he was happy with that. He said that although the government allows a 55 cent a mile deduction for driving expenses, the real cost to him was only about 20 cents a mile. I think the real cost is probably much higher.

My question is about the real cost of driving, and the effect of uber car and it's competitors on the economy. If uber car drivers really do make a fair return at the current rates, I think there will be more and more of them, and more people will use them rather than their own cars. I am in Atlanta and I already know people who own cars, but choose to use uber car in areas where parking is a problem. I am 64 and my night vision is not what it used to be and I am considering using them more for night driving. If this really takes off I could see it changing the whole way we use cars. What are your thoughts?
I was very interested in the company, so I went through driver orientation and even did a few trips out of curiosity (as a driver, I'm an avid Uber user)

Their cars need to be within 10 years of age. Drivers probably do get about a buck a mile after Ubers commission, but obviously only while they are on a 'trip'. They are not getting paid while they drive around looking for rides. If you drive Uber for a year, I would guess you would pocket somewhere in the neighborhood of 10-15 an hour after expenses. You are able to make huge sums of money during big nights when they have high surge pricing (say Halloween or new years), but other nights it may not be as busy.

I live in Chicago, and an Uber home from work costs about 7-8 bucks usually, and a cab would cost 12 bucks. Not only is it more convenient than a cab, but its also much cheaper.
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tc101
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Re: Uber Car and the real cost of driving

Post by tc101 »

The guy I talked to last night said the car had to be 2009 or newer, or 5 years old or less. Maybe that varies from city to city. The car also has to have 4 doors.
I would guess you would pocket somewhere in the neighborhood of 10-15 an hour after expenses.
If you are out of work, that sure would beat working at McDonalds or Walmart for minimum wage. It also seems to work for people who have jobs but want some extra income. The guy I talked to last night had a regular full time job, and was very happy about the extra income from Uber Car.

What do you think the real cost per mile of operating a car is?
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Re: Uber Car and the real cost of driving

Post by tc101 »

They are not getting paid while they drive around looking for rides.
In my part of Atlanta, they usually park while waiting for a ride. It would depend on the availability of free parking.
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nordlead
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Re: Uber Car and the real cost of driving

Post by nordlead »

The government $0.55/mile deal is for deprecation, insurance, maintenance, and fuel. There is a large range of cars, some as cheap as $16k new (Honda Fit), and some as expensive as $60k new (fully loaded mini van for example). So, if we assume the government calculated out a $30k car for 125k miles, that would be $0.24/mile right there. For donation miles, they give $0.14/mile, which covers gas and oil I think. So, now we are up to $0.38/mile. Insurance for a new car is at least $0.6/mile, which puts you at $0.44/mile. So, the last ~$0.10/mile has to cover tires, basic maintenance, and major repairs (more than enough).

So, the government figure at ~$0.55/mile is reasonable. That doesn't mean that you can't beat it, as the number was for "average" car use. Heavy car use of a cheap car will drive down your $/mile. You can save at least $0.10/mile by buying a cheaper car and driving it longer. Also, the government reimbusment rate for gas/oil equates to ~25.5mpg at $3.50/gallon. Since gas is cheaper now, a 30mpg car would save ~$0.04/mile. You can save money on maintenance too. So, all in, he could be paying less than $0.35/mile, but $0.20/mile seems too low unless he is getting a great resale price on his heavily driven car. He may be paying $0.20/mile now, but may have to pay $0.50/mile next year as he replaces all of the tires, brakes, etc... and has to replace a muffler or O2 sensor.
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Re: Uber Car and the real cost of driving

Post by invest0 »

Also live in Chicago and UberX most everywhere now. If you have a couple people with you, it's even cheaper than mass transit half the time.

Usually it's not hard to find the total cost of ownership of a car if you Google. So far selling my own and using UberX has been a huge positive here. Couldn't be happier to see it continue to see it gain steam.
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Re: Uber Car and the real cost of driving

Post by TheRightKost87 »

Interesting (for me) that this topic would come up today. I use Uber fairly frequently and had never had a problem/complaint up until my ride last night. It was surge pricing (3x) but I was willing to accept as I needed to get to a sporting event. The ride took twice as long (time-wise) as it should have, and the driver got lost a couple times on a fairly basic route that I had already plugged the address into the app. I'll give him the benefit of the doubt that it was an honest mistake, and not an attempt to gouge me for extra, but I'm still not happy that the ride cost me about $40 (by far the most I've ever paid with Uber). I ended up being late for the event as a result.

I usually love Uber, so I'll contact their customer service and see if anything can be done to right the wrong. EDIT: I emailed the customer support team and got a prompt response and my full fare refunded (I would have been happy to pay what I should have owed, but they were nice enough to comp me the whole thing). With that kind of customer service I can see them doing very well
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rec7
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Re: Uber Car and the real cost of driving

Post by rec7 »

Do the Uber drivers compete on price with each other? I have not used uber.
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tc101
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Re: Uber Car and the real cost of driving

Post by tc101 »

I had a driver take the long way one time, but it only added $4 to the bill so I didn't complain. I thought it might have been an honest mistake, or maybe he knew more about traffic pasterns and took the longer route to save time.

Here is an interesting story about how Uber just starts operating even without a city permit. They are big enough that they can just ignore the law in some cases.
http://www.arktimes.com/ArkansasBlog/ar ... d-approval
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nordlead
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Re: Uber Car and the real cost of driving

Post by nordlead »

oh, and of course, if you buy older used cars in good condition you can spend even less $/mile, but that isn't what the government figure was for.

I know that I spend on average ~$395/month on all car stuff (including parking, tolls, registration, etc...) since January 2010, and drive ~13k miles/year. That comes out to $0.369/mile over the last 4 years. If I factor in my recouped costs (selling the previous car), it goes down to $0.345/mile. Every year that I continue to drive the Forester and don't buy a new car that average will go down. Once I buy a new car, it'll bump up again.

I currently drive an 05 Subaru Forester (bought 2.5 years ago) and I have an 01 Honda F4i motorcycle (didn't really get used this year since I need to repair it). I had a 96 Honda Accord prior to the Forester.
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Re: Uber Car and the real cost of driving

Post by denovo »

The real cost of driving will be variable depending on if you have a high or low maintenance car. Driving usually has some major expected expenses that you should spread out over the use of the car like tire replacements, brake pad replacements, and so forth.
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Re: Uber Car and the real cost of driving

Post by jebmke »

I plan to move before my driving skills decline. Then I will give up my keys gladly. From there, I plan to hoof it, use mass transit.
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Re: Uber Car and the real cost of driving

Post by LeeMKE »

I sold our second car last year and use transit, Zipcar and Uber.

According to the calculator on the ZipCar website, the cost of having my own car was about $6,600/year, and that jives with my estimates.

I use the bus when the route works for where I am going, ZipCar when traveling to appointments farther away than bus lines or when making too many stops or needing to cart stuff (groceries, cello), and Uber when parking at the destination is problematic.

I've spent $1310.00 so far this year on all modes of transportation, so just under $1600 per year. Whoa. Very Bogleheads-Like.

AND I get to use ZipCar and Uber when I travel, keeping the learning curve and nuisance factor down.
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Re: Uber Car and the real cost of driving

Post by jebmke »

Do all uber drivers carry insurance that allows taking paying passengers?
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Re: Uber Car and the real cost of driving

Post by littlebird »

jebmke wrote:I plan to move before my driving skills decline. Then I will give up my keys gladly. From there, I plan to hoof it, use mass transit.
Reality check: When your driving skills decline, your hoofing skills may do likewise. :D
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Re: Uber Car and the real cost of driving

Post by tj »

Last night someone told me the uber drivers make $26/hr. I'm in Coastal Southern California.
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Re: Uber Car and the real cost of driving

Post by gandolphfitch »

Here's a recent article purporting to analyze what Uber drivers make: http://www.slate.com/articles/business/ ... great.html

The takeaway: Uber drivers are probably not making nearly as much as you might think.

My thoughts: If Uber drivers were making really good money (define that as you will), Uber would react by reducing commissions. Also, $20 cents per mile is way too low. Yes, you can probably beat the IRS standard rate, but not by that much.
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Re: Uber Car and the real cost of driving

Post by oneleaf »

Uber just launched in the Portland Metro Area surrounding areas (minus Portland). This is exciting. I might take a trial ride this week, just to try it.

I launched the app and it indicated I could get a car to pick me up in only 2 minutes. For those who use Uber, is this generally an accurate figure?

We were planning on buying a second car (to replace an old one) something this year. This may change our plans. I estimated an annual cost of ownership on a Honda Fit (brand new and driving only 3k miles a year... this second car would get much less use than our primary car) of about $4000-$4500/yr. If actually calculating depreciation on an annual basis, it would be more the first year and gradually go down... we would own it for about 10 years. That'd buy me about 4 or so roundtrip rides per week averaging $9-$10 per ride. I think I would average less than that, since we do have public transportation here that I can also use.
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Re: Uber Car and the real cost of driving

Post by poker27 »

oneleaf wrote:Uber just launched in the Portland Metro Area surrounding areas (minus Portland). This is exciting. I might take a trial ride this week, just to try it.

I launched the app and it indicated I could get a car to pick me up in only 2 minutes. For those who use Uber, is this generally an accurate figure?

We were planning on buying a second car (to replace an old one) something this year. This may change our plans. I estimated an annual cost of ownership on a Honda Fit (brand new and driving only 3k miles a year... this second car would get much less use than our primary car) of about $4000-$4500/yr. If actually calculating depreciation on an annual basis, it would be more the first year and gradually go down... we would own it for about 10 years. That'd buy me about 4 or so roundtrip rides per week averaging $9-$10 per ride. I think I would average less than that, since we do have public transportation here that I can also use.
I'd say the average time for me getting an uber is 5min in chicago. It all depends on where you are requesting and time of day. Depending on supply and demand uber does raise the prices (they tell you before you book) and it can get very expensive. For example on Halloween the cost was 5.5x the normal rate. So a $20 ride would cost you 100+.
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Re: Uber Car and the real cost of driving

Post by oneleaf »

poker27 wrote: I'd say the average time for me getting an uber is 5min in chicago. It all depends on where you are requesting and time of day. Depending on supply and demand uber does raise the prices (they tell you before you book) and it can get very expensive. For example on Halloween the cost was 5.5x the normal rate. So a $20 ride would cost you 100+.
Thanks for the feedback.
Does the price surge happen regularly, i.e. everyday at rush hour? Or is it mostly just holidays and special events? How much should I take this into account when comparing Uber to the cost of car ownership?
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Re: Uber Car and the real cost of driving

Post by StealthWealth »

The future of transportation is pretty exciting. I think there is a good chance that in a decade the need to own a car will be greatly diminished. Eventually Uber will not have drivers but you will be able to call a self-driving car on demand. This will have a huge positive impact on traffic and urban infrastructure requirements. A surprising amount for real estate is dedicated to parking that will be repurposed to something useful. Why own something that sits idle 95% of the time when you can call a car on demand?
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Re: Uber Car and the real cost of driving

Post by poker27 »

oneleaf wrote:
poker27 wrote: I'd say the average time for me getting an uber is 5min in chicago. It all depends on where you are requesting and time of day. Depending on supply and demand uber does raise the prices (they tell you before you book) and it can get very expensive. For example on Halloween the cost was 5.5x the normal rate. So a $20 ride would cost you 100+.
Thanks for the feedback.
Does the price surge happen regularly, i.e. everyday at rush hour? Or is it mostly just holidays and special events? How much should I take this into account when comparing Uber to the cost of car ownership?
I normally see it during bad weather (rain or snow), Friday/ Saturday nights around 7-9 and 12am-2am. Rush hour occasionally. Remember surge may be happening in one area, of the city, but normal rates in others (all depends on the amount of people requesting cars).

It depends on how dependent you will be on uber. I will hardly ever request a ride when it's more then 1.5x. During Halloween I was prepared to stay out or walk home instead of paying the amount, but id imagine chicago is more walkable then Portland. I would factor in an additional % to cover it, maybe 15-20. I've found that uber at 1.5x surge is then comparable to taking a cab.
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Re: Uber Car and the real cost of driving

Post by dgdevil »

The NYT discussed Uber's impact on Los Angeles drivers in an article last week. Seems a lot of New Yorkers in LA, who don't have cars, are loving Uber.

How Uber is changing night life in Los Angeles: http://www.nytimes.com/2014/11/02/fashi ... .html?_r=0

I have not done the personal math on dumping the car and going Uber, but as my 20-year-old car requires more and more repairs, Uber seems a much better use of capital - especially with my costly liability-only insurance. My experiences both in the USA and overseas have been great, apart from one driver whose slightly older car reeked of dog.
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Re: Uber Car and the real cost of driving

Post by JoMoney »

I would think the government rate is pretty close to the average. AAA does a report with their findings:
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Re: Uber Car and the real cost of driving

Post by adamthesmythe »

gandolphfitch cited an interesting and relevant article. It is not clear to me that the uber business plan is sustainable. Remember that lots of internet companies turned out not to be sustainable after buying market share for too much.

Commercial taxis (in the US at least) are usually run-down and seedy. I occasionally pay for a ride to the airport and usually use a commercial limo. Not too much more than a regular taxi, professional, and straightforward to use.
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Re: Uber Car and the real cost of driving

Post by Jack FFR1846 »

There are a llot of assumptions in responses here. I think everyone is assuming big city residence and travel. If some uber driver were hanging around 2 minutes from my house, someone would call the police and they would spend spme time explaining themself. In Boston, uber has competition from lyft (pink mostache on the grill) and sidecar. In addition, Boston requires cabs to be relatively new and in a lot of cases hybrids. Taxi companies have added apps to match convenience of uber. The biggest complaint seems to be that cab drivers often cannot communicate well in English.

I thought about driving for uber and did some research and went over their application and expected pay per hour in my area and in Boston (25 miles away). I concluded that it would not be a high paying job at all. I wonder if drivers understand that they do have to pay tax on the income.
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tran_man007
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Re: Uber Car and the real cost of driving

Post by tran_man007 »

Living in New York City, I find that having a car-sharing service is tremendously useful.

From a consumer perspective the positives are:
-able to request a car and know and track it's arrival on a map
-able to rate drivers to provide some sort of feedback
-can be a cheaper than owning a car (depending on usage)
-no parking fees

Negatives:
-There is surge pricing (which I don't think is necessarily a bad thing, but annoying to deal with)
-They are regulated, but not the extent of NYC Taxi/Limo's; how are cars are insured is a gray area
-Uber drivers sometimes don't know where the neighborhood as well

All in all, Uber introduced some good ideas but more importantly has caused uprooting the monopoly between cities and cab companies and forced them to re-think how transportation should work. But they really should clear up the insurance issue.
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Re: Uber Car and the real cost of driving

Post by Rayandron »

StealthWealth wrote:The future of transportation is pretty exciting. I think there is a good chance that in a decade the need to own a car will be greatly diminished. Eventually Uber will not have drivers but you will be able to call a self-driving car on demand. This will have a huge positive impact on traffic and urban infrastructure requirements. A surprising amount for real estate is dedicated to parking that will be repurposed to something useful. Why own something that sits idle 95% of the time when you can call a car on demand?
Totally agree. It's going to be really interesting what happens when self-driving cars hit the market in the next 10-20 years. Knock-on effects will be far-reaching and unpredictable too. One thought I've had is, if you assume:

A) Financial cost of commuting decreases due to not needing to own a car as an individual
B) Time cost of commuting decreases due to being able to be connected to internet and "productive" while commuting
C) Supply of urban real estate increases due to no longer needing parking structures/spaces

Then the result could be to reverse the current explosion of gentrification in urban city centers and the related growth of urban property prices.

Who knows what other assets/industries will be changed by the self-driving vehicles?
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Re: Uber Car and the real cost of driving

Post by Lars_2013 »

Rayandron wrote:It's going to be really interesting what happens when self-driving cars hit the market in the next 10-20 years. Knock-on effects will be far-reaching and unpredictable too. One thought I've had is, if you assume:

A) Financial cost of commuting decreases due to not needing to own a car as an individual
B) Time cost of commuting decreases due to being able to be connected to internet and "productive" while commuting
C) Supply of urban real estate increases due to no longer needing parking structures/spaces

Then the result could be to reverse the current explosion of gentrification in urban city centers and the related growth of urban property prices.

Who knows what other assets/industries will be changed by the self-driving vehicles?
I agree and it's one reason I don't include the value of my house (walking distance to downtown) in my net worth calculations. Although, I think the cost of self-driving cars (either on a short-term rental or ownership basis) will still be significant enough that in neighborhoods with a lot of students and/or lower-income families there may not be a big change.
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matjen
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Re: Uber Car and the real cost of driving

Post by matjen »

Thought this would interest many on this thread. I think the golden era of Uber/Lyft drivers making $ may have passed but there are still people doing this part time effectively. All sorts of strategy goes into it and there are now apps that do business intelligence on your driving sessions.

http://www.financialsamurai.com/why-wou ... LHf2w.dpbs

http://therideshareguy.com/

"Normally when I’m out putting around in my SUV driving people around for Uber (or Lyft – I do both), the first question they ask is: “So do you do this full time?” Reluctantly, I usually tell them, “No, I also work for an engineering company as an aerospace engineer.” (odds are, if you’ve ever flown, you’ve been on one of our planes). It’s not that I’m embarrassed to be a full time engineer/part time Uber driver, but it always elicits a very strange reaction from my passengers.

Why would anyone who has a perfectly good job want to drive around a bunch of jokers during his free time? They don’t outright say it, but I’m sure that’s what they’re thinking. But there are actually a lot of reasons why I enjoy it and as you may have guessed, it’s not just about the money. Well a big part of it is about the money, so let’s explore that a little more first:"
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sambb
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Re: Uber Car and the real cost of driving

Post by sambb »

been using uber, and I would pay a premium any day for this service over a regular taxi. love it.
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Re: Uber Car and the real cost of driving

Post by randomguy »

JoMoney wrote:I would think the government rate is pretty close to the average. AAA does a report with their findings:

Those numbers are good for an average. Those are for 5 year old cars. For something like Uber you could potentially get more years out (http://rideshareapps.com/uber-vehicle-r ... -for-2016/ most places other than DC let you get away with a 10 year+ car) or efficient. And cranking up the mileage can change these costs a lot. Mileage is very personal. They had an interview at some guy who was average 400 mile/day for the year (basically he was an airport shuttle and the airport was 30 miles from his resort town).
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Re: Uber Car and the real cost of driving

Post by Valuethinker »

StealthWealth wrote:The future of transportation is pretty exciting. I think there is a good chance that in a decade the need to own a car will be greatly diminished. Eventually Uber will not have drivers but you will be able to call a self-driving car on demand. This will have a huge positive impact on traffic and urban infrastructure requirements. A surprising amount for real estate is dedicated to parking that will be repurposed to something useful. Why own something that sits idle 95% of the time when you can call a car on demand?
It won't though.

Yes, fewer cars (maybe). Yes fewer cars parked (maybe). But traffic? Since the cost of traffic is not the gasoline cost (trivial compared to the other costs such as depreciation & insurance) but the time cost, if the roads become less crowded, more people will use the roads to travel longer distances.

This is the main revelation of empirical traffic research in the last 50+ years. More roads don't bring less traffic congestion. Since the cost of traffic is a time cost, if you lower that by increasing capacity, demand rises: people commute more, and further (there's a law about commuting, the average commute world wide tends towards 1 hour *except* for very high status jobs, where it is longer).

So self driving cars will still fill the roads. The gains in throughput (more cars on the roadspace) will occur earlier, but fully self driving cars will allow people to work (people commute 90 mins+ by train each way to London), thus lowering the time cost. Personal public transport in effect.

You can see how class segregation will come into this. Unless we plan carefully, Uber will take the last middle class riders off public buses. You could wind up with *no* affordable transport for the very low income.
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Re: Uber Car and the real cost of driving

Post by Valuethinker »

tc101 wrote:I was talking to an Uber Car driver last night. He said the driver makes about a dollar a mile driving, and that he was happy with that. He said that although the government allows a 55 cent a mile deduction for driving expenses, the real cost to him was only about 20 cents a mile. I think the real cost is probably much higher.

My question is about the real cost of driving, and the effect of uber car and it's competitors on the economy. If uber car drivers really do make a fair return at the current rates, I think there will be more and more of them, and more people will use them rather than their own cars. I am in Atlanta and I already know people who own cars, but choose to use uber car in areas where parking is a problem. I am 64 and my night vision is not what it used to be and I am considering using them more for night driving. If this really takes off I could see it changing the whole way we use cars. What are your thoughts?
One should understand about the economics of driving for Uber.

This is a purely competitive market, a la the wheat farmer of Econ 101.

Therefore availability will rise, and rates will be driven down, until no Uber driver makes a superior return. *this* is why cab licenses were originally limited back in the 19th century. Too many horsedrawn cabs in cities, leading to mass congestion, lots of drivers sitting around.

We are going back to that world. Uber drivers waiting for rides will clutter up very congregation point. There will be fierce competition. There will be too many cars available at convenient times of day (flex pricing will reinforce that), and too few at inconvenient times of day (Uber should charge higher rates at night when demand is low, to incentivize greater availability).

Note that this is precisely the world of any Third World city. Cabs are unlicensed or corruptly licensed. Taxi companies fight armed wars (the South African taxi wars are legendary). Public transport can't compete.

Minicabs in any British city are half way to Uber and no one would think a minicab driver makes much of a living per hour, not when you factor in the cost of the vehicle, petrol etc.
Valuethinker
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Re: Uber Car and the real cost of driving

Post by Valuethinker »

matjen wrote:Thought this would interest many on this thread. I think the golden era of Uber/Lyft drivers making $ may have passed but there are still people doing this part time effectively. All sorts of strategy goes into it and there are now apps that do business intelligence on your driving sessions.

http://www.financialsamurai.com/why-wou ... LHf2w.dpbs

http://therideshareguy.com/

"Normally when I’m out putting around in my SUV driving people around for Uber (or Lyft – I do both), the first question they ask is: “So do you do this full time?” Reluctantly, I usually tell them, “No, I also work for an engineering company as an aerospace engineer.” (odds are, if you’ve ever flown, you’ve been on one of our planes). It’s not that I’m embarrassed to be a full time engineer/part time Uber driver, but it always elicits a very strange reaction from my passengers.

Why would anyone who has a perfectly good job want to drive around a bunch of jokers during his free time? They don’t outright say it, but I’m sure that’s what they’re thinking. But there are actually a lot of reasons why I enjoy it and as you may have guessed, it’s not just about the money. Well a big part of it is about the money, so let’s explore that a little more first:"
And note the effect. More part time drivers drives down returns for all drivers.

Being an Uber driver will eventually lead to being paid at the margin, ie below what a full time cabbie would want. It's not going to be a lucrative gig.

Generally that's true of the "gig economy". It will drive down compensation.
Last edited by Valuethinker on Tue May 31, 2016 2:28 am, edited 1 time in total.
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Re: Uber Car and the real cost of driving

Post by Valuethinker »

Rayandron wrote:
StealthWealth wrote:The future of transportation is pretty exciting. I think there is a good chance that in a decade the need to own a car will be greatly diminished. Eventually Uber will not have drivers but you will be able to call a self-driving car on demand. This will have a huge positive impact on traffic and urban infrastructure requirements. A surprising amount for real estate is dedicated to parking that will be repurposed to something useful. Why own something that sits idle 95% of the time when you can call a car on demand?
Totally agree. It's going to be really interesting what happens when self-driving cars hit the market in the next 10-20 years. Knock-on effects will be far-reaching and unpredictable too. One thought I've had is, if you assume:

A) Financial cost of commuting decreases due to not needing to own a car as an individual
B) Time cost of commuting decreases due to being able to be connected to internet and "productive" while commuting
C) Supply of urban real estate increases due to no longer needing parking structures/spaces

Then the result could be to reverse the current explosion of gentrification in urban city centers and the related growth of urban property prices.

Who knows what other assets/industries will be changed by the self-driving vehicles?
City Centers have their own amenities which most suburbs lack. Most postwar suburbs lack any sense of "place" (other than strip malls and big box stores; the traditional American indoor shopping mall is going the way of the Dodo in so many places).

As long as crime rates stay down (the resurrection of the American downtown has been enabled in large part by the fall in crime rates) then downtown will still have a "there" factor. One might cite Atlanta of course, where it's not the downtown but certain "midtown" centers (I have seen that in other cities). That will attract the young, and also the post-family group (empty nesters). The tendency to delay having children or not to have them at all, will reinforce this. I certainly know of couples that have bought that condo downtown (sometimes whilst keeping a house in the far suburbs or rural areas) post children reaching 21.

As we saw in the Ferguson scenario (massive demographic change in the area) it's the inner suburbs that may be/ become the new centers for low income people-- cheaper than downtown. I have seen that effect in Toronto for example, and London England and Vancouver. And in those cities, there's a palpable "reverse commute" people who live downtown and work by the airport, etc.

Self driving cars will increase urban expansion especially "exurbs" and "ruburbs". But therefore they may not reduce traffic congestion. There's a one off benefit to capacity from better driving and fewer accidents (say +30%, 50% even?) and then that's it. As a wider range of people can drive (ie those now not licensed, maybe not able to afford a car) and it's less time-costly to drive (think the Google Bus from downtown SF to Google HQ, with all the busy networked workers) traffic could do *up*. Also municipal bus services may cease to be competitive-- lose a bus, and that's 20-30 cars on the road.

I agree there will be unpredictable effects out of self driving cars.
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Re: Uber Car and the real cost of driving

Post by tim1999 »

A few months ago, Uber cut rates in my area by probably 30%. Based on the rides I've taken (looking at price and duration) once Uber takes their cut, the drivers are now probably making $15 per hour minus car expenses assuming they keep busy.
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Re: Uber Car and the real cost of driving

Post by matjen »

Interesting posts/thoughts Valuethinker. :beer
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Re: Uber Car and the real cost of driving

Post by nimo956 »

This is just one anecdote. Certain airports have contracts with cab companies so that only they are allowed to pick up customers. A 30 min ride from the airport to my office costs $70, including tolls and tip. The same ride from my office to the airport costs $17 total. I'm now a complete Uber convert.
Last edited by nimo956 on Tue May 31, 2016 10:21 am, edited 2 times in total.
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Maverick3320
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Re: Uber Car and the real cost of driving

Post by Maverick3320 »

jlawrence01 wrote:
rec7 wrote:Can you use an old car and be a uber driver? I am guessing insurance would be expensive.
I think that the car has to be no more then three years old.

The insurance will be MUCH higher than if you were not using it for a livery service. And by the way, you MUST inform the insurance company that you will be using your car as a livery service.
Either this is untrue, or it's location based. I took an Uber trip in a 2001 VW Jetta last month.
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SmileyFace
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Re: Uber Car and the real cost of driving

Post by SmileyFace »

Maverick3320 wrote:
Either this is untrue, or it's location based. I took an Uber trip in a 2001 VW Jetta last month.
Right on their website it states the car has to be Year-2000 or newer (2005 in some cities) so your driver was within the rules. You replied to a statement made back in 2014 so maybe the rules were different back them.
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Re: Uber Car and the real cost of driving

Post by Maverick3320 »

Valuethinker wrote:
tc101 wrote:I was talking to an Uber Car driver last night. He said the driver makes about a dollar a mile driving, and that he was happy with that. He said that although the government allows a 55 cent a mile deduction for driving expenses, the real cost to him was only about 20 cents a mile. I think the real cost is probably much higher.

My question is about the real cost of driving, and the effect of uber car and it's competitors on the economy. If uber car drivers really do make a fair return at the current rates, I think there will be more and more of them, and more people will use them rather than their own cars. I am in Atlanta and I already know people who own cars, but choose to use uber car in areas where parking is a problem. I am 64 and my night vision is not what it used to be and I am considering using them more for night driving. If this really takes off I could see it changing the whole way we use cars. What are your thoughts?
One should understand about the economics of driving for Uber.

This is a purely competitive market, a la the wheat farmer of Econ 101.

Therefore availability will rise, and rates will be driven down, until no Uber driver makes a superior return. *this* is why cab licenses were originally limited back in the 19th century. Too many horsedrawn cabs in cities, leading to mass congestion, lots of drivers sitting around.

We are going back to that world. Uber drivers waiting for rides will clutter up very congregation point. There will be fierce competition. There will be too many cars available at convenient times of day (flex pricing will reinforce that), and too few at inconvenient times of day (Uber should charge higher rates at night when demand is low, to incentivize greater availability).

Note that this is precisely the world of any Third World city. Cabs are unlicensed or corruptly licensed. Taxi companies fight armed wars (the South African taxi wars are legendary). Public transport can't compete.

Minicabs in any British city are half way to Uber and no one would think a minicab driver makes much of a living per hour, not when you factor in the cost of the vehicle, petrol etc.
It is not a purely competitive market, by any means. First, there are barriers to entry - you need a cell phone to order an Uber cab, etc. Second, and most importantly, Uber cab drivers cannot compete on price. Your "race to the bottom" argument generally is sold by the old guard/monopoly cab companies under the guise of a quasi-political "but it's bad for the people!" argument, when it's not. Public transportation can't compete not because of the race to the bottom, but because in general, it's economically impossible. Further, public transportation isn't sold under the argument of economics, anyway, it's sold as a morality play (as it should be). City buses aren't going anywhere.

Also, there is no need to charge higher prices at inconvenient times of the day - the prices are adjusted by Uber to ensure supply meets demand.
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Re: Uber Car and the real cost of driving

Post by Maverick3320 »

DaftInvestor wrote:
Maverick3320 wrote:
Either this is untrue, or it's location based. I took an Uber trip in a 2001 VW Jetta last month.
Right on their website it states the car has to be Year-2000 or newer (2005 in some cities) so your driver was within the rules. You replied to a statement made back in 2014 so maybe the rules were different back them.
Ah, thank you. Didn't see the date :)
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Re: Uber Car and the real cost of driving

Post by randomguy »

StealthWealth wrote:The future of transportation is pretty exciting. I think there is a good chance that in a decade the need to own a car will be greatly diminished. Eventually Uber will not have drivers but you will be able to call a self-driving car on demand. This will have a huge positive impact on traffic and urban infrastructure requirements. A surprising amount for real estate is dedicated to parking that will be repurposed to something useful. Why own something that sits idle 95% of the time when you can call a car on demand?
Because it is cheaper:) The unknown is will it be cheaper for me to contract out driving to another company or to just buy my own car. And there are benefits to owning your car (it is always there, you can load it down with junk, you don't get exposured to other peoples germs,...). Now I just doubled traffic as I drive into the city, get dropped off at work, and then tell my car to drive home and park ( 2 bucks of electricity is cheaper than 20 dollars for parking). Now I just doubled the road miles my car will travel.

Or maybe the way for a transportation company to win is to flood the streets with cars so one is always 1 min away. Now we have 10k empty cars constantly driving around doing nothing but causing congestion.

Things will change (i.e. you can cram cars a lot closer together when parking if you don't need to open the doors. Having the ability to move any car allows you to pack them tighter.). Predicating the end result though gets a lot harder. Past experience though has shown that demand tends to outpace any improvements in very short order. If I can park 30% more cars, 30% more people will find a need for a car. Cut commute times by 15 mins and people will start living 15 mins farther away. How it all balances out is impossible to know.
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Re: Uber Car and the real cost of driving

Post by inbox788 »

nordlead wrote:The government $0.55/mile deal is for deprecation, insurance, maintenance, and fuel. There is a large range of cars, some as cheap as $16k new (Honda Fit), and some as expensive as $60k new (fully loaded mini van for example). So, if we assume the government calculated out a $30k car for 125k miles, that would be $0.24/mile right there. For donation miles, they give $0.14/mile, which covers gas and oil I think. So, now we are up to $0.38/mile. Insurance for a new car is at least $0.6/mile, which puts you at $0.44/mile. So, the last ~$0.10/mile has to cover tires, basic maintenance, and major repairs (more than enough).

So, the government figure at ~$0.55/mile is reasonable. That doesn't mean that you can't beat it, as the number was for "average" car use. Heavy car use of a cheap car will drive down your $/mile. You can save at least $0.10/mile by buying a cheaper car and driving it longer. Also, the government reimbusment rate for gas/oil equates to ~25.5mpg at $3.50/gallon. Since gas is cheaper now, a 30mpg car would save ~$0.04/mile. You can save money on maintenance too. So, all in, he could be paying less than $0.35/mile, but $0.20/mile seems too low unless he is getting a great resale price on his heavily driven car. He may be paying $0.20/mile now, but may have to pay $0.50/mile next year as he replaces all of the tires, brakes, etc... and has to replace a muffler or O2 sensor.
If he's paying all the fixed costs anyway, he might be using the $0.14/mile gas and oil figure and maybe adding in $0.06/mile insurance or some additional cost. Whether a cost is fixed or variable can be debatable. If you drive part time and use only 10-25% of the time, only the gas might be noticeable. Tires or brake pad costs may not be significant. Depreciation on additional miles, especially in an older car is also not much. And insurance is a gray area depending on additional mileage and coverage for commercial purposes combined with coverage provided by Uber while driving passengers. Obvious additional out of pocket costs might well be $0.20 or less.

Additional costs might include car washes and cleaning the car between passengers, but if you're idle and not on a ride, cleaning the inside of the car might be considered part of the job. There's a lot of factors to consider in the costs that are not consistently applied. Zip car has dealt with some in interesting ways, such as paying drivers to take the car to the wash.

http://www.zipcar.com/how#faqs
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Epsilon Delta
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Re: Uber Car and the real cost of driving

Post by Epsilon Delta »

Valuethinker wrote: Yes, fewer cars (maybe). Yes fewer cars parked (maybe). But traffic? Since the cost of traffic is not the gasoline cost (trivial compared to the other costs such as depreciation & insurance) but the time cost, if the roads become less crowded, more people will use the roads to travel longer distances.
One effect of self driving cars is that the time cost of "driving" goes down, since you can sleep, read the paper etc. So total miles travels can be expected to go up, even if self driving cars don't decrease congestion through better driving.

Self driving cars will help parking. They can probably double the density of all but the densest parking in Manhattan or London. In the burbs an order of magnitude might be possible. They can park within inches of each other, they have competent drivers and you don't need to open the doors while parked. You also need very little space for circulation, they can park nose to tail, if they are rentals the one at the front takes the job and the rest shuffle forward; if the cars are privately owned you need a little more room for random access, but they can still shuttle round a loop. They will also be able to do things like segregate themselves by size, play Tetris to fill up odd shaped areas and you don't need handicapped spaces (You need handicapped accessible loading zones, but not parking).

Increased parking is important in places like Manhattan. Some people think that self driving cars will drive from Jersey to Manhattan, drop the passenger and drive home. Not going to happen, at least it won't be the norm. During rush hour there is no excess capacity either in or out bound. (Where there was excess outbound capacity it was converted to reversible lanes). So you need to store most of the rush hour surge on the Island.
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Re: Uber Car and the real cost of driving

Post by kramer »

My friend traveled to Kuala Lumpur, Malaysia a few months ago and only used Uber to get around the area. He never paid more than 2 US dollars for a ride inside the city, incredible.

When I was staying in the same city a few years ago with my mother, we were staying at a nice hotel and early in the morning had them get a cab for us to take us to the airport to leave the country (the airport is a long ride outside of the city). Anyway, the cab driver they called picked us up and the cab was not in very good condition. He seemed a little upset as we were on are way and he said he was forced to pay a kickback to the hotel employee and also would be charging us a few more dollars (Malay Ringit) than the pre-agreed upon rate. All in all a bad situation and I would gladly use Uber instead today.

Even our arrival in that city would have been helped by Uber. We went to the taxi stand inside the airport and were quoted the standard charge to get a cab to the city. No problem and we got to the city. Only later did I learn we were quoted the standard charge for a luxury car (roughly 50% more) and not a regular cab. I would rather have been able to choose among options.
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