How sharing the road is likely to transform American mobility

Increased passenger density and decreased vehicle footprint should bring strong growth for ridesharing in the decade ahead

Getting around is about to get a lot more interesting. The mobility sector could well undergo a major overhaul in the next ten years, significantly upsetting traditional elements of the transportation industry and accelerating the shift from purchasing (or leasing) a vehicle as a product to consuming mobility as a service.

Four essential innovations are rapidly redefining modern mobility: autonomous vehicles (AVs), connected cars, electric vehicles (EVs), and shared-mobility services. These technologies will likely converge—think autonomous, electric-powered robo-taxis—and contribute to a new era of personal mobility (Exhibit 1).

When those technologies at last take hold, shared mobility—driven by fleets of autonomous robo-taxis—could generate the biggest slice of new revenues. That prize could amount to some $1.5-2.0 trillion in 2030. But while the dozen or so years until 2030 is not exactly a lifetime, it’s still a long time, especially when the larger ridesharing companies continue to make significant billion-dollar investments each year and have not yet reached profitability.1 Currently, a rideshare driver’s net income consumes half of the total fares collected, and he or she must book two to three rides of 5-6 miles in distance to net $14 to $15 per hour—a pay level that’s increasingly available for less demanding jobs in a tightening labor market. Driver retention is also one of the biggest costs in a rideshare company’s profit-and-loss statement, and that cost can only go up.

Factor in that ridesharing currently only represents about 1 percent of US passenger-miles traveled (PMT) and that ridesharing’s practicality decreases dramatically the further away from a city you happen to be, and one can understand the doubters. Is ridesharing destined to be confined to a small urban core? Investors might also fairly put the question another way: Just where is all the growth supposed to come from before the robo-taxis arrive?

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