Popularity of Ride-Hailing Rises Globally
The popularity of ride-hailing continues to increase. On-demand, ride-hailing services have grown sharply this decade, and more studies point their potential to reshape transportation and produce numerous public benefits, including declining energy consumption, less pollution, increased transportation access for the elderly and disabled, and reduced congestion.
“There is a high level of awareness of ride-hailing worldwide,” Alexandre Marian of AlixPartners told The Fuse.
One consequence of ride-hailing’s popularity is it has led some consumers to delay or avoid buying their own personal vehicle. A recently released study from AlixPartners shows that in the U.S., slightly more than 20 percent of ride-hailing users say they have delayed or avoided buying their own car due to the availability of services such as Lyft and Uber. Among those who use car-sharing companies (Maven, Car2go, Zipcar), almost 30 percent say they have postponed buying a vehicle.
In other parts of the world, ride-hailing and car-sharing are also having a significant impact. In European countries, car-sharing has led to even a higher percentage of the population rethinking vehicle ownership. AlixPartners says 39-64 percent in European markets have delayed buying their own cars. Meanwhile, Chinese consumers are expected to see the sharpest rise in ride-hailing usage in 2018.
AlixPartners’ study is one of many that reflect the growing popularity and societal benefits of ride-sharing. Research from MIT released last year showed that if more riders were willing to use services offered by companies such as Uber and Lyft, instead of riding alone, the city of New York could reduce the number of vehicles by factor of three. Data from the city of San Francisco also shows how popular these services have been: On weekdays, vehicles from Lyft, Uber, or similar companies make up a quarter of the city’s trips in the downtown areas. In a study from McKinsey, of the consumers surveyed, more than 60 percent said that they plan to increase their use of ride-hailing.
Challenges to shared mobility
Despite the upsides, there are limitations to ride-hailing and car-sharing. As McKinsey notes, ride-hailing makes up only “a small fraction” of total miles driven in the U.S., and services are typically not available in rural areas and the costs are too high for commuters to use on a daily basis. Furthermore, there is not yet any data that shows that total vehicle demand in the U.S. has declined as ride-hailing and car-sharing have picked up. The reported dramatic reduction in urban vehicle purchases has not been corroborated by U.S. Census data on household vehicle ownership. Lastly, one potential risk of ride-hailing is that it may increase traffic and cause congestion in downtown areas. “As of now, it hasn’t had a significant effect on congestion, but if it does have negative impacts, they can be mitigated through regulation and incentives for ride-sharing,” Marian said.
The AlixPartners survey found that costs are the main deterrent to using ride-hailing and car-sharing, with 36 percent saying they would utilize them more if they were less expensive. Against that backdrop lies the potential of shared autonomous vehicles—or robotaxis—to open services to more consumers. By eliminating the driver, costs would drop, making rides more economically attractive. Moreover, robotaxis would be less limited by geography and would have the potential to go beyond cities. AVs can target different areas and utilize various fleets based on consumer preference and need.
Consumers appear comfortable with robotaxis, but there is still some hesitation. In China, more than 60 percent of respondents in the AlixPartners survey said they would use a robotaxi, but for the U.S., the number dips to under 30 percent. However, analysts say consumer acceptance of AVs will grow over time as they are used more on public roads.
Marian pointed out that car-sharing awareness has actually declined over the past four years, when AlixPartners last did a survey on the subject. But it is by no means “dead,” and car-sharing companies will be well positioned to take advantage of an economy running on robotaxis since they will require fleet
Autonomous and electric vehicles to bring peak demand?
The rapid growth in ride-sharing and the potential of AVs may have a profound effect on fuel consumption. Many forecasters are suggesting earlier timelines for peak oil demand. In the latest Energy Outlook from BP, the oil major says in its evolving transition scenario, oil demand will eventually peak in the 2030s as a result of vehicle technology changing at a quick pace and a large increase in electric vehicles. The massive growth of EVs, from about 3 million now to 320 million by 2040, would in large part stem from advancement of autonomy and shared mobility.
But this outlook is a best-case scenario. Although technology is changing rapidly, petroleum’s monopoly on the transportation sector will be difficult to break. Strong government policies and a major shift in consumer preference will be necessary to alter the current path for oil demand and spur greater diversity in the transport sector. “Changes in the car industry will definitely slow down the growth of oil, but it will still grow,” the IEA’s Fatih Birol told Bloomberg TV this week. “We don’t see a peak in the next two decades.”
Source: The Fuse