The hybrid model of vehicle ownership
Andre Haddad
2379

The Tesla example does not work for me. I do not think one would basically be getting a Tesla Model S for free by renting it out one week a month. I get the point overall. But I think there’s an omission of a necessary factor that would make the article and points much stronger with more accurate data.

The Tesla example only works if one excludes the entire factor of vehicle mileage (or usage is less than numbers below). But one really can’t do that because mileage on a vehicle is intrinsically linked to cost and value. Whether purchased in cash, financed, or leased, numbers are no longer comparable if vehicle mileage exceeds the mileage upon which costs and values are based. (Simple example: a two year old Model S driven 50,000 miles is worth less than one driven 24,000 miles. The true cost of the one driven 50,000 miles will exceed the monthly payments made — — in every scenario, owned, financed, and leased.)

The Tesla example might work if the one or more renters during the 7 days only drove a total of 23% (1/4.3 weeks) of the miles allotted for the month. By allotted, I simply refer to the vehicle owner’s expectation or goal for how much the vehicle will be driven total. Such may or may not be 12,000 or 15,000 miles a year. But if it’s anything greater and the owner hasn’t thought about additional costs and decreased value, the owner has a poor picture of total cost of ownership.

At figures based even on 15,000 miles per year, Turo renters during the one week of the month would have to not drive more 291 miles aggregated or less than 42 miles per day averaged. I don’t need Turo’s entire data collection to know that’s not generally happening. And it certainly wouldn’t with a Model S! I’ve driven them twice myself. There’s no way if I had one for a day that I would drive less than 42 miles. :-)

Perhaps because I am so “total cost-minded” in how I think, for me the example detracts from the overall points. I do not currently agree that Turo is inside the hybrid model bubble as a whole. I think it is still actually quite within the boundaries of the zero ownership model. It is much more like Uber and Lyft than it is owner a car, based on how Turo currently functions. I think it where is sometimes crosses over into the hybrid ownership bubble is with repeat renters. I think a personal example best illustrates this. I had one particular renter from the other side of the country who was in Utah frequently. She may actually have averaged renting 7 days a month even. She is even referred to the particular car as her car away from home. This scenario is where I see the hybrid ownership part happening. The one-off renters, no, not really.

Although it might vary greatly from owner to owner, I think economic viability of putting an otherwise dormant vehicle into service depends on factors of average miles driven per customer, age of vehicle, and a number of factors that could probably all be graphed out really beautifully. In the end, from my perspective, vehicle mileage is a factor that cannot be left out — — whether the Tesla example or just the concept with Turo as a whole.

Whether it is Uber, Lyft, Turo, or others, sharing-economy automotive models that don’t include vehicle mileage in calculations of costs and earnings are not presenting an accurate picture. Much of this happens with the users themselves — drivers on Uber and owners on Turo, etc. Too many focus on the cash flow coming in nearly immediately (short term) and ignore the total cost (long term). Outside of a more personal figure, the federal mileage deduction rate is a good fall back figure to use for total cost since that is generally what can be used by sharing economy drivers and owners for calculating net income vs. gross receipts.

At intervals, I think about disruptive innovation and brainstorm across many different industries. I believe I have thought about how to make the world a better place my entire life excluding perhaps when I was a toddler. And I have thought a lot of the sharing economy. It is one sign of things headed in a good direction, in my opinion, and a little more away from a own everything, narcissistic, “thing accumulating”, rat race of a world that has NOT led to increased happiness overall.

I think we’ll likely see more of the hybrid model you described in the future. Maybe Turo will be the one to more solidly cross that threshold. I think, as one example, little headway has been made into the realm of how vehicles are sold. We talk of disruptive innovation in the automotive realm when it comes to sharing and transporting people, while we have a purchase and sell process than is antiquated and ultra-conservative. Even in 2016, how cars are purchased is basically the opposites of innovation, efficiency, and positive experience. I think the hybrid model might be better molded and utilized when we finally disruptive the giant manufacturer and grossly outdated dealership network model.

I hope this helps — someone at least. For the record, nothing here is a criticism of Turo in any way. I’m a huge fan of Turo. I have been a huge fan of Tesla too for years for that matter. If I still owned 2 cars I previously had rented out through Turo, I would still be renting those out. I had sad previous renters when the vehicles stopped being available. Turo has been responsive and has struck me as a great company overall. I even sometimes look at the job board and consider working there. And Turo’s professional photography program was brilliance itself, a true win-win-win for 3 parties, which for me resulted in me telling quite a few people about how I wanted to buy my own car when the photos were done. So this isn’t negative about Turo. I just think we all benefit from looking at innovation with full data.

- Matt Winters
http://linkedin.com/in/mattwinters

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