The demise of public transportation

Uber/Lyft are here to stay. These services are sometimes considered as the same as a urban car service company, like cab companies. In San Francisco Uber alone is now 3x bigger than the city taxi industry and they just announced their billionth ride.

Uber is transformative, not only it has transformed the car service industry but it’s about to transform urban transportation as we know it. 22% of Uber riders are holding off buying a car. Uber/Lyft are truly disruptive companies. But I argue in this essay that they are not only disrupting the taxi industry or the car manufacturing industry but they are about to disrupt all transportation, in special public transportation. Doing some simple math I show that in the next 10/15 years using a service like Uber will be cheaper than using public transportation. I will use as an example using the public transport system in Boston, but the same underlining concepts should be valid independent of the city, metropolitan area.

Riding the Subway

Riding the subway in Boston currently costs around \$2.10. That means that if Uber/Lyft reduce their price for any ride within the subway system to less than \$2.10 that would make riding the public system obsolete because of the convenience of Uber/Lyft. I bet that in the next 10/15 years the cost of using such services will go down because of the creation of driverless cars and they will be cheaper than riding public transportation..

UberX

Public transport costs around \$2.10 in Boston, Massachusetts. On the uber website the cost for getting a uber is equals to

Driverless cars

With driverless cars all the income that Uber drivers receive will not be necessary and that would be equivalent of cutting around 80% of the price that we pay today. That means that each ride gives Uber a total of \$0.4 + \$0.032/min + \$0.248/mile.

A ride from Riverside to Park Street through Uber would cost around:

= \$0.4 + \$0.032/min*27min + \$0.248/mile*13.5 miles = \$4.612

UberPool (or Ride sharing)

That is still more than \$2.10 — a subway ride. That’s not cheap enough, but ride sharing (e.g. UberPool) would make the costs even lower. With only 2 other people in the car the cost would go down to:

\$4.612/3 = \$1.53

That’s 70% of the cost of the subway ride and that’s assuming only 3 riders share a ride! A car with all the 5 seats occupied and no driver the cost could go down to less than \$1!

\$4.612/5 = \$0.94

That’s more than twice as cheap as the subway ride. That’s dirt cheap!

The future is here

Ride-sharing services will become cheaper than public transportation. With driverless the demand for parking will reduce, and the design of cities will need to be reimagined. The cost of transportation will reduce which will allow people to spread out even more from city centers, making the housing market less competitive and eventually reducing housing prices. The future is bright.

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