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Will Americans stop driving because of Uber?

The Daily Ticker
The Daily Ticker
Daily Ticker

Uber has already made it easy to quit using cabs in many cities. But can the service eventually inspire lots of Americans to forgo owning a car of their own?

The mobile-phone on-demand car service is valued at more than $17 billion by private investors who have grand ambitions for Uber to upend urban travel. The five-year-old service is already in more than 130 cities, and is perceived as enough of a threat to taxi services that cab drivers and local regulators have sought to block its entry on their turf.

In London and parts of Europe, cab drivers shut down major roads in protest of the car-sharing service. While commentators have scoffed at the enormous valuation placed on San Francisco-based Uber, the company has clearly proved it has staying power. Ironically, after London’s “black cab” drivers snarled traffic in protest of the new competition, Uber’s ridership in the city surged 850%.

In a New York Times article this morning, technology columnist Farhad Manjoo suggests that Uber could one-day lead to the end of personal cars. Especially in densely populated areas served by Uber and competitors such as Lyft, relying on such on-demand, cost-competitive transport networks can be cheaper than buying, insuring, maintaining and parking a car. Though far-fetched, this could be what will lead Americans into embracing car sharing.

Related: Uber protests block roads throughout Europe

“I think that’s a stretch,” says Yahoo Finance’s Rick Newman. “It’s clearly disruptive in urban markets where taxis have been entrenched for years…[but it] doesn’t effect people who live in suburbs that much. I live in the suburbs and I don’t foresee putting off a car purchase because Uber is there.”

Yahoo Finance's Michael Santoli contends that Uber’s valuation prices in reaching beyond typical taxi markets. “These disruptive technologies are never just about the first use, they’re never just about ‘oh yeah, I can replace my car service with these things,’ it’s always about some bigger idea,” he says. “And to me the bigger idea is that the average person uses their car 5% of the time and if you do the math on that you think ‘wow we only need 1/20th as many cars in this country.’”

Related: Why Uber Might Well Be Worth $18 Billion

Uber isn’t the first company to come to this conclusion; car-sharing companies like ZipCar have long been around. Once considered a maverick threat to entrenched car-rental companies, ZipCar was acquired last year by Avis Budget Group. Other leaders of the informal “sharing economy” such as in-home accommodations site Airbnb (which is expanding into home-based restaurants) are generating similar excitement for allowing individuals to become local entrepreneuers and encouraging the more efficient use of resources.

“One good thing that could come out of this,” says Rick Newman, “is that this could take a big expense off the balance sheets of young people starting out who don’t need a [personal] car.”

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