As companies like Uber and Lyft turn the cars of ordinary drivers into taxi cabs, at what point does using their service become cheaper than owning a car? That’s a difficult question, and it varies depending on location because of varying gas prices, taxi fare, insurance rates, and parking fees. Los Angeles resident Kyle Hill, however, has crunched the numbers for his personal vehicle and provides you with a formula you could use to find the truth about your yearly driving expenses. For Hill, the estimated yearly cost of owning a vehicle came to $12,744 while the cost of taking UberX rides (the company’s least expensive option) he estimated at $18,115.
In general, the cost of car-sharing services has yet to out-price operating a vehicle yourself. Still, the rates are often cheaper than a taxi cab and this has caused a German court to issue an injunction against UberX across the entire country. The cheaper rates, the court argues, are a result of unfair practices such as forgoing the insurance and licensing fees required of taxi cab companies as well as freelance drivers.
The market is changing, to be sure. So at what point would you abandon your vehicle? It is purely a dollars and cents decision or would the prospect of having a personal driver encourage you to spend a little more? In his Big Think interview, INSEAD professor of technology Karan Girotra explains what is meant by business modeling innovation (BMI), which Uber has used to great success:
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