With the popularity of ridesharing services growing, more consumers are wondering whether hailing a ride on an app can offer a viable and affordable alternative to owning a car.
According to new research from two University of Texas at Austin engineers funded by the U.S. Department of Energy’s Oak Ridge National Laboratory, how we value our time is the most critical factor consumers need to keep in mind when evaluating transportation options.
Todd Davidson, a research associate at the university’s Energy Institute, and engineering professor Michael Webber developed a sophisticated economic model that weighs several variables to help consumers decide: Should I own a vehicle or commute using ridesharing services?
Based on this research, they created a new website tool, RideOrDrive.org, that is online and free for the public to use.
The calculator allows consumers to input data about their vehicles, driving habits and how they value their time. It weighs the pros and cons of mobility services versus personal car ownership based on individual data.
“Our analysis of the all-in cost of car ownership shows that ride-hailing and ride-sharing services will likely provide a compelling economic option for many people,” Davidson said.
For example, the owner of a new, limited-edition SUV who only drives to the supermarket once or twice a week may be better off hiring a car service than letting a vehicle depreciate while sitting idly in a garage or driveway. On the other hand, the owner of a fuel-efficient 10-year-old sedan who drives several hundred miles a week clearly would be better served by driving that vehicle for as long as is practicable.
“The subjective value of an individual’s time — the dollars per hour you would assign to the time you spend driving — is one of the most important factors in our calculations,” said Webber, deputy director of the Energy Institute.
Davidson and Webber ask visitors using the calculator, “How much would you pay to not be stressed driving around town? How much would you pay to catch up on email, read a book or take a nap? Your time is worth something. So maybe the best question is: How much would you pay to save time?”
Direct expenses cover the vehicle’s upfront cost, maintenance and repairs, insurance and parking. Indirect expenses include building a garage and time spent filling the tank or recharging a battery. Importantly, the tool also measures the value consumers ascribe to driving-related activities: circling the block looking for a parking space, reading a book or taking a nap, or avoiding the stress of driving during rush-hour traffic.
“It’s all about trade-offs,” Davidson said.
Adding to the complexity of the decision is the changing landscape of transportation technologies. Nearly every major car company has stepped up production of electric vehicles, and many have invested considerable resources into robotics, telematics and other technologies related to self-driving cars, or autonomous vehicles.
These types of advances will continue to impact the economics of the ride-or-drive equation. “As more and more people take advantage of these new mobility services, the amount and type of energy consumed may change, too,” Davidson noted.
As electric vehicles become more prevalent, for example, their lower maintenance costs may become more attractive for consumers considering whether to own or hire a vehicle. As technology evolves, variables change, the researchers said.