Should I Share or Should I Own?

By John Eichberger | May 2016

I may be a relic of the past – I love to drive. I want to be behind the wheel, not in the passenger seat. And I want to drive my car, not someone else’s or a pool car. Fortunately, my love for driving pairs nicely with my compulsion to be in control. Some might call me a control freak – I am ok with that, just give me the keys.

But it seems times are changing and people may begin to give up car ownership in order to avail themselves of new sharing services. The recent Fuels Institute report, “Shared Travel: Revolution or Evolution?” evaluates the market penetration of car sharing services. It is a great snapshot of the size of this burgeoning industry and, at first glance, it is easy to dismiss the services as peripheral players at best.

But just wait. By 2060, it’s expected that the U.S. population will increase by nearly 100 million people. Given historic population trends, it is most likely that these individuals predominantly will live in metropolitan areas. (Indeed, the percent of Americans who live in such areas increased from 56% in 1950 to 84% in 2010.) According to the data presented in the recent report, the vast majority of car sharing services are laser focused on urban markets where owning a car is more costly (insurance, parking, etc.) and more complex (parking, traffic, etc.). The ability to use a car when needed and not incur the associated costs of ownership can be an attractive attribute for car sharing services, especially when one typically uses their car on average only 4% of the time.

With this in mind, I believe the future for car sharing services could be very bright, and I am not the only one who thinks so.

In a recent Bluepaper, Morgan Stanley Research projects that by 2030 25% of the miles traveled in the United States will be via shared mobility. Their report talks about “the delivery of the mile as a utility,” which I consider a very interesting concept. I interpret this as suggesting that travel will become commoditized – get from point A to point B at the lowest possible cost and time. It is a theory that cuts deeply into my personal preference to own the vehicle I enjoy driving.

Morgan Stanley believes that the concurrent market development of electric drive, shared mobility and autonomous technology will in the long term be highly disruptive to the transportation industry. I find it very interesting that these are the same factors that featured prominently in the cases presented by university students in our recent case competition – great minds think alike.

If this growth in shared mobility does come to fruition, what will be the effect on miles traveled, fuel demand and vehicle ownership? Our recent report shows that it is far too early to see evidence of effect in national data because market share is so limited. However, Alan Baum and Associates estimate that the effect of such services, including Lyft and Uber, involve many offsetting factors that could result in a net neutral effect on vehicle sales, even if ownership of those vehicles might shift from individuals to sharing fleets. (See the related article in this issue of Fuel for Thought.) The effect on miles traveled, however, is what will really matter – but no one seems to have been able to figure out the answer to that question…yet.

The whole concept of a shared mobility market for the future is gaining significant attention and apparent momentum. Whether in the form of individuals driving a fleet vehicle or on-demand chauffeured services providing transport, the future seems quite bullish.

Personally, I am curious to see what effect this might have on overall traffic and congestion. If such services improve overall transport efficiency, that could reduce travel times and frustration and, consequently, reduce overall emissions (a significant portion of transport-related emissions are directly related to congestion).

On the flip side, as David Owen points out in “The Conundrum,” often when new services provide an alternative to personal travel and reduce traffic congestion, this has the offsetting potential to increase the appeal of personal travel options. The possible result is people begin to abandon the new service in order to take advantage of the improved flow of traditional travel routes in their personal vehicles. They then find themselves in worse congestion than before and complain that more people (not themselves, of course) are not availing themselves of the new transport option.

Personally, I hope everyone opts for new transport options in order to open the road for me. I want my neighbors to “share” so that I can be more free to “own.” Hmmm, is that a clash of interests? Maybe I am part of the problem Owen was discussing.

Read more from the May Issue of our Fuel for Thought newsletter.