Will Uber and Lyft make ‘car cutting’ the new cord cutting?


Could owning a car go the way of paying for cable television or having a home phone? If this Uber executive is any indication, the answer is a resounding yes.

During a forum for Latin American business leaders, Uber’s CEO for Latin America, George Gordon, remarked that he hasn’t owned a car in nearly a decade. “This is one of the changes this technology brings,” he said, according to a tweet TWTR, +1.17%  from an attendee.

Others have made the same choice. Around 9% of people who sold or traded in a vehicle over the past year decided to forego getting a new car in favor of using services like Uber and Lyft, a poll conducted by Reuters and Ipsos found last May.

Robert Farrington, founder of personal finance website The College Investor, is one of those people. When the time came for Farrington to replace his car, which was over a decade old and had more than 100,000 miles, he decided to test his hand at going without his own car. Instead, he planned on using Uber or Lyft for the bulk of his transportation needs. His family still owned another car, but he primarily traveled via ride-sharing.

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“Purchasing a car would cost several thousand dollars and getting a loan would have a monthly payment of at least $300 or more, especially including insurance, so ride sharing looked like it could be a good option,” Farrington said. “The worst case was, if ride sharing didn’t work, I would just buy a car anyway.”

His experiment has proved to be a resounding success: He only spends between $100 and $200 per month on rides with Uber, and he has found that the availability of cars is fairly good even though he lives in the suburbs. “I definitely think it’s a viable option as long as ride sharing is available and low cost,” he said.

More people could start benefiting from the car-free lifestyle

People like Farrington represent just the tip of the iceberg of consumers who could stand to benefit from making this lifestyle choice away from car ownership. One study found that as many as 25% of current American drivers could benefit from ditching their vehicles in favor of ride-sharing services.

But it’s not just that people are choosing to get rid of their cars — many more people these days are just opting not to drive in the first place. Between 1983 and 2014, the percentage of people between the ages of 16 and 44 who held a driver’s license decreased from 91.8% to 76.7%, according to research from the University of Michigan’s Transportation Research Institute.

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Research has shown that the vast majority of people who use a ride-sharing service still haven’t changed whether or not they own a vehicle.

The shift away car ownership is even more notable when taking car-sharing services such as Zipcar and car2go into account. Unlike Lyft and Uber, which allow users to hail cars or carpool with others, car-sharing programs allow members to reserve a car they drive themselves. Users typically pay an hourly rate for the time they use a car, and there are sometimes recurring fees for a membership.

While 43% of Zipcar members owned a car prior to joining, only 24% continue to do so after they’ve joined, Zipcar found in a study. It does, of course, have a vested interest in people renting rather than buying automobiles.

Car-sharing could have an even bigger impact

Moreover, researchers at University of California, Davis, surmised that from an environmental perspective Uber and Lyft may not have a significant impact. Their study found that users of services such as Uber or Lyft were more likely to substitute ride-sharing for taking public transportation than they were for replacing a personal vehicle. (Lyft did not immediately return a request for comment.)

That means these services could actually be adding more cars to the road they are getting rid of them. Comparatively, a study conducted by experts at University of California, Berkeley, suggested that each car-sharing vehicle replaces between 9 and 13 personally-owned vehicles. Zipcar estimates that it has taken more than 400,000 cars off the road since it went into business.

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Indeed, as part of its goal to reduce individual car ownership, Uber has begun to explore ways to expand its services beyond ride-sharing, Uber CEO Dara Khosrowshahi outlined in a blogpost earlier this month. “Having a greater variety of transportation modes at your fingertips helps make it increasingly easy to live without a car,” Khosrowshahi wrote. “That’s why we want to provide alternatives to personal car ownership by bringing together multiple modes of transportation right in our app.”

Later in April, the company plans to launch Uber Rent, its own car-sharing service through a partnership with car-sharing provider Getaround, in San Francisco.

Additionally, Uber has formed a deal with public transit mobile ticketing provider Masabi to allow Uber users to begin booking and using transit tickets through its app. Uber also announced plans to acquire bike-sharing start-up JUMP. With JUMP, Uber has already piloted a bike-sharing service through its app, which is currently available in San Francisco and Washington, D.C.