The hybrid model of vehicle ownership

Andre Haddad
Nov 16, 2016 · 7 min read

Our social future is necessarily influenced by the growing ubiquity of the sharing economy. From sharing homes to sharing cars, technology and our collaborative momentum are marking a cultural shift in how people think of ownership. What does it mean to own something? Must we own socially critical commodities in order to access them and reap their benefits? Increasingly, the answer is becoming, no, not necessarily.

The old, monolithic model of yore — that you own something that only you use — is starting to break down due to changing social paradigms, as well changes in costs and the economy.

And while I (along with the rest of the world) am electrified by this fundamental shift in social norms, it’s impractical to speak in absolutes about what the “future of transportation” looks like. My forecast is that it will be a diverse future, with three burgeoning vehicle ownership models that will harmoniously coexist in our rapidly evolving world, and that will directly affect future car designs and applications.

The status quo: Traditional ownership

The first ownership model is an iteration on the status quo. While it’s true that millennials are reassessing the cultural presumption that everyone must own a car, people will continue to buy cars. For one, owning a car is convenient — not everyone lives in an urban center and can easily benefit from public transportation and ridesharing. And what about parents? Ask any parent out there and they’ll extol the virtues of having their own on-the-go living room, complete with car seats and a basket of toys.

And since the Model T, people have loved and will continue to be captivated by cars. Owning and driving a car piques an emotional response in us — not only are we free and unfettered, coasting down the highway with the wind on our skin, but we feel invincible, powerful, and in control. The fact that we can travel 80 mph by our own volition, whenever and wherever we want, empowers us with control. And not control in the hubristic sense, but control in the sense that we’re not beholden to timetables, we don’t need to ask permission, we can just go. We’re in control of our own destiny, where we go, and how we get there.

Traditional ownership isn’t going anywhere — cars have become an elemental part of the modern human experience. But, cars are expensive. They sit idle 96% of the day. They start depreciating the moment you drive them off the lot. They are a significant investment that offer no cash return. Convenience and cachet don’t always outweigh the dollars and cents.

So the second ownership model is the diametric opposite of the status quo — the zero-ownership model.

The uber-disruption: Zero ownership

Ridesharing companies are abuzz about this disruptive Car-as-a-Service model and how it will completely eclipse the phenomenon of car ownership in the near future. And these days, the data is on their side. For short duration trips and in city centers where parking is scarce and stress is high, the zero-ownership model is very practical. It’s also achievable thanks to the dense network, the existing untapped supply, the bubbling demand, and the prices that are a competitive match for public transportation. A significant chunk of the market will in fact, in my opinion, continue to opt for access over ownership in the coming years, but I don’t think it will be an absolute seachange.

Striking a chord: Hybrid ownership

Which brings me to the third ownership model — a hybrid model. The hybrid ownership model offers a compromise between the two extremes by addressing the current flaws with traditional vehicle ownership while embracing the new school of resource sharing, and is exactly how our company, peer-to-peer car sharing marketplace, Turo, operates.

The hybrid car ownership model is aptly illustrated by the global trend of peer-to-peer car sharing. Car owners earn money by sharing one of their most expensive and underutilized assets, and travelers get access to a wider selection of cars while enjoying a richer, and often less expensive, experience than traditional rental car agencies can offer.

By striking a harmony between traditional ownership and the resource-sharing zeitgeist of the zero-ownership model, both sides of the marketplace — the car owner and the car renter — win. And both parties can fall in love with cars all over again without being dissuaded by sticker shock; they can “car up”, so to speak, without breaking the bank.

A Tesla owner renting out his or her 2016 Model S seven days per month, for instance, earns $1,021 on average on Turo. With the average monthly finance amount for a Model S being about $1,020, you basically get a free Tesla if you rent it out one week per month. And the boons certainly aren’t just limited to Teslas. You could own a free BMW 3 Series if you rent it 10 days per month, or a free Jeep Wrangler for just over six rental days per month.

Own a free Tesla Model S by renting it one week per month

Any make, any model

Regardless of make and model, aspirational car owners are finding themselves in the black on their auto investments — they’re buying their dream cars and minimizing their financial burden all the while.

And original equipment manufacturers (OEMs) will reap the benefits of the hybrid model as well. They’re already harnessing the forces of modern innovation (namely electrification, connectivity, and autonomy) to push the envelope of automotive design, and ownership trends, too, will influence how they design their cars. I can easily imagine a world where the design of cars will change significantly, and that each vehicle out there will be partly owned by individuals, and partly used by everyone else. Car manufacturers are seeing a huge opportunity to sell more unique models optimized for specific uses, rather than models that merely serve the lowest common denominator.

I hypothesize that the basic cookie-cutter car will become less relevant, and that we’ll continue to see more specialization in cars. Instead of the lowest common denominator car (some midsize sedan that can handle whatever is thrown at it — city, highway, all-terrain, all-weather, etc.) that caters to the monolithic model of ownership, the shared market will allow for people to choose the car that’s best for the occasion, the trip, whatever the task at hand. A city-dwelling San Franciscan may want a two-seater Smart for its convenience, value, and parkability, but when she wants to go to Tahoe, or go furniture shopping at Ikea, she needs other options. With the hybrid ownership model, she can rent an SUV with four-wheel drive for her mountain weekend, or a sturdy pickup truck for her Ikea run. And rent out her Smart in the meantime to people visiting the city.

A bright future for cars

With lower barriers to access, choice and specialization tend to emerge. Turning a car from a cost center into an earning engine opens up the diverse car market to more people. With less need for homogeneity that serves every possible scenario satisfactorily, there arises more opportunity for richness, variety, and choice that serve unique scenarios extraordinarily well.

With a hybrid ownership model, you can afford the car you want, access the car you need, ride when you want to ride, and drive when you want to drive. That feeling of freedom that has captivated us for generations evolves to the next level with hybrid ownership, offering access as well as ownership, cultivating choice and offering variety to all sides of the market. Variety, so they say, is the spice of life, and variety will drive a richer future for transportation, car design, and society at large.

(1) Average monthly earnings based on average Turo owner earnings between January 2016 and August 2016.

(2) Monthly finance amount based on latest base Porsche 911 model; MSRP $90,400, 72 month term, 4.74% APR, 5% down payment

(3) Monthly finance amount based on latest base Tesla Model S 60; MSRP $67,200, 72 month term, 4.74% APR, 5% down payment

(4) Monthly finance amount based on latest base Jeep Wrangler model; MSRP $23,995, 72 month term, 4.74% APR, 5% down payment

(5) Monthly finance amount based on latest base Mercedes-Benz GLA-Class model; MSRP $32,850, 72 month term, 4.74% APR, 5% down payment

(6) Monthly finance amount based on latest base Toyota Sienna model; MSRP $29,750, 72 month term, 4.74% APR, 5% down payment

(7) Monthly finance amount based on latest base BMW 3 Series model; MSRP $33,450, 72 month term, 4.74% APR, 5% down payment

(8) Monthly finance amount based on latest base MINI Cooper Countryman model; MSRP $22,750, 72 month term, 4.74% APR, 5% down payment

(9) Monthly finance amount based on latest base Volkswagen Jetta model; MSRP $17,895, 72 month term, 4.74% APR, 5% down payment

(10) Monthly finance amount based on latest base Honda Civic model; MSRP $18,640, 72 month term, 4.74% APR, 5% down payment

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