The ride-hailing war isn’t stabilizing — it’s just getting started

And that should make us worried about the impact on cities

With the unexpectedly swift settlement in the Waymo-Uber lawsuit and the promise by Uber CEO Dara Khosrowshahi to change the scandalous culture of the company, it might seem that the “move fast and break things” ethos of ride hailing is coming to end — but that would be the wrong conclusion.

There’s no doubt that the nature of the ride-hailing industry is changing, but that doesn’t mean its disruptive quality will be lessened. The positive PR campaigns and uncritical parroting of company talking points by much of the tech press must be contrasted with the reality that cities say Uber still isn’t cooperating or sharing the necessary data with them and driver compensation was cut by about $2.2 billion in 2017.

The truth is that competition in the ride-hailing space isn’t slowing down, it’s just getting started — not just in the United States, but around the world. And given that studies already show a range of negative impacts from ride-hailing, the war for our streets will likely intensify these trends and make transportation worse for nearly everyone.

Competition is heating up

In the United States, the competition for the ride-hailing market is between Uber and Lyft; and while Uber commands a formidable lead, it has taken a significant hit due to the #DeleteUber campaign and the string of controversies that eventually brought down former CEO Travis Kalanick. Lyft was estimated to have a 23.7-percent market share in August 2017, compared to Uber’s 74.3 percent, but investor projections that leaked in November claimed it could have as much as a third of the market by the end of that year.

That’s only a small fraction of the competition Uber is facing globally, where a concerted push is being made by other ride-hailing companies to take on the global juggernaut. In 2016, Uber sold off its Chinese operations to Didi Chuxing, the dominant player in China and Uber’s largest global competitor, and it did the same in Russia in 2017, combining its operations with Russian ride-hailing company Yandex.Taxi. However, this shouldn’t be seen as a trend.

After a sizable investment at the beginning of 2018, SoftBank made public its desire to see Uber pull out of a number of markets in Asia and Africa to refocus on the Americas, Europe, and Australia; but Khosrowshahi has denied that Uber intends to follow that advice. That doesn’t mean Uber will have an easy path to dominance in those markets though.

Source: Mashable.

Across the world, regional competitors have risen up to challenge Uber, and they tend to have an advantage because of their roots in the regions they serve — it doesn’t hurt that many have also received significant investments from Didi. But all of these aspects only focus on the growing competition in the traditional ride-hailing model using human drivers. There are also new developments that will cause further disruption for urban residents.

In late 2017, Alphabet’s self-driving vehicle subsidiary, Waymo, announced that it would be launching a limited ride-hailing service using driverless minivans in a suburb of Phoenix, Arizona, and the state has approved its application. In the settlement of the Waymo-Uber lawsuit, Waymo took a 0.34 percent stake in Uber, which led some in tech press to opine that the rivalry between the two companies could lessen as a result; but given that Alphabet’s venture-capital arm GV already has a stake in Uber, that seems unlikely. If any company has the capital to break into the US ride-hailing market at this point, it’s Waymo, and that’s exactly what it looks to be doing.

It wouldn’t be surprising for Waymo to launch similar limited driverless services in the suburbs of other large southern cities which have a lot of clear weather over the next year or two, and GM has announced plans to offer similar services with its own self-driving fleet beginning in 2019. Uber also wants to have self-driving vehicles on the road in eighteen months, but even Khosrowshahi has acknowledged they would only be able to handle a very small percentage of trips — less than five percent — in the beginning.

Given that Waymo and GM have some of the best tech in the industry, their plans are not surprising, but there’s still reason to question whether self-driving cars will be able to serve the general public outside sprawling suburbs. However, Uber’s tech is comparatively among the worst, making its plans much more suspect. Further ride-hailing competition already presents some major concerns, and the addition of self-driving vehicles adds additional worries about safety, increased suburban sprawl, and even worse congestion.

Ride hailing is bad for cities

For a while, ride-hailing companies could claim that their services were taking cars off the road and making life better in major cities because they were too new for research to have been done on their impacts; but a number of studies were released throughout 2017 and into 2018 which challenge the message that Uber has been propagating.

An October 2017 report released by UC Davis which collected data from seven major US metro areas — Boston, Chicago, Los Angeles, New York, San Francisco, Seattle, and Washington, D.C. — showed that 91 percent of ride-hailing users have not made any changes with regard to car ownership, and those that got rid of at least one vehicle simply made up for the reduction in miles traveled in their own vehicles with an increase in miles traveled through ride hailing. That measure is important because an increase in vehicle miles traveled (VMT) in a city often corresponds with increased traffic congestion and slower travel speeds.

A relatively small number of people use ride hailing, and they skew young, educated, and well off. Source: UC Davis.

The UC Davis report had additional evidence suggesting that ride hailing was increasing VMT because it found that 49 to 61 percent of ride-hailing trips either would not have been made at all or would have been made with public transit, walking, or biking if ride hailing hadn’t been an option. All of those trips are adding VMT, thus contributing to increased emissions and traffic congestion, and UC Davis isn’t the only study to have found such results.

The Metropolitan Area Planning Council released a report on a survey it conducted of ride-hailing passengers in the Boston metro area in February 2018 which showed that, had ride hailing not been an option, 42 percent of passengers would have used public transit, 12 percent would have walked or biked, and 5 percent would not have made the trip — meaning 59 percent of ride-hailing trips were adding vehicles to the road and increasing VMT.

A June 2017 report by the San Francisco County Transportation Authority was much more detailed about the number of vehicles that ride-hailing companies were adding to city streets. It estimated that 5,700 vehicles were being added during the peak hours of a typical weekday, increasing to 6,500 on Fridays, which is 15 times the number of taxis operating at the same time because taxi numbers are capped and ride-hailing vehicles are not. This adds 170,000 vehicle trips and 570,000 VMT within San Francisco on a typical weekday, and those trips “are concentrated in the densest and most congested” parts of the city, which are also the “most well served by public transit, bicycling, and walking facilities.” The higher number of VMT is associated with “greater levels of emissions of greenhouse gases like CO₂ as well as other pollutants,” and “greater roadway congestion and conflicts.” The report also points out that its estimates are conservative because they don’t measure trips which originate outside the boundaries of the city and underestimate the VMT from out-of-service vehicles.

Source: Schaller Consulting.

A similar trend as played out in Manhattan, as was documented in Schaller Consulting’s December 2017 report. It found that the number of taxi and ride-hailing vehicles increased by 59 percent between 2013 to 2017 — there are 68,000 licensed ride-hailing vehicles — and that VMT also increased by 36 percent, adding 600 million miles traveled over that same time period. These additional miles have made congestion much worse and slowed travel times, which has also contributed to the rapid decrease in bus ridership.

Existing ride-hailing services are putting more vehicles on the road and increasing the number of miles traveled, which has had the effect of making congestion worse and slowing travel times. Taxis have lost market share against ride-hailing vehicles, but that’s not necessary because of the app-based service: the number of ride-hailing vehicles has far eclipsed the number of taxis because the latter are capped while the former are not. The resulting congestion is making bus services less reliable, thus pushing people away from transit. And those trends will likely only be exacerbated if a large-scale shift to driverless vehicles can be realized.

Automation is not a panacea

It’s still a big question as to whether self-driving cars will be able to effectively navigate busy urban environments and inclement weather, and even if the driverless pod without a steering wheel becomes a reality, that doesn’t automatically mean we’ll have arrived at transportation utopia.

There would be additional costs associated with the technologies that make autonomous driving possible, which also use a lot of energy, but there would also be a cost reduction from removing the human driver. It’s been predicted that this would result in a lower per-ride cost, which could open ride hailing up to a wider market, but there would also be downsides to that development.

We’ve already seen how many vehicles have been added to the road by existing ride-hailing services. It’s possible that automation could reduce the number of unoccupied vehicles in service at any given time, but the lower fares would also increase the number of passengers, which would likely result in an overall increase in VMT, further worsening congestion, especially if more street space is given over to bikes and pedestrians.

The Shaller Consulting report also noted that one of the problems in the case of Manhattan was that ride-hailing trips were typically longer than taxi trips, which means more miles traveled per trip. There’s a growing fear that driverless vehicles, by reducing the need for humans to drive them, could promote a new wave of suburban sprawl, which would further increase trip length and potentially also increase commuting times, which are already unbearably long. When technologists talk about the future they believe autonomous vehicles could create, it often involves more walkable communities and people living closer together, yet it’s likely that they’d inspire the very opposite. By reducing the cost, both in terms of money and attention, self-driving cars could push us even farther apart.

There’s also a final concern which has been largely downplayed in the promotional materials and reports in the tech press about self-driving cars. It’s true that the technology could massively reduce road deaths if it eventually reaches level-5 capabilities where it can navigate every situation without human control — and to be clear, that’s still pretty far off. In the meantime, companies will be putting vehicles on public roads to give them experience in difficult situations, but if they’re not prepared for all possible eventualities, there could be terrible consequences.

The worry here isn’t necessarily with companies like Waymo and GM, whose technologies appear to be leading in the self-driving race, but rather with Tesla, Uber, and similar companies who are making big promises, but whose autonomous systems are severely lacking. In order to try to catch up, they could put vehicles in busy urban areas that they aren’t ready for. Tesla is the only company which has had a vehicle in autonomous mode involved in a fatal accident, and documents from the Waymo-Uber trial revealed that former Uber CEO Travis Kalanick and Anthony Levandowski, the former Waymo engineer who later worked at Uber, discussed “think[ing] through the strategy to take all the shortcuts we can” in developing driverless vehicles, which does not inspire confidence in their safety.

The desire of private companies to displace public transit and capture as much of the public street system for themselves as they possibly can is not coming to end, no matter how conciliatory Uber’s new CEO pretends to be in media interviews. In truth, the competition among ride-hailing companies and between ride hailing and other forms of transportation is only getting started, and unless we take action to regulate how they can operate in urban centers, their negative effects will continue to grow.

We can already have more inclusive cities and transportation that frees us from personal vehicles without the downsides of ride hailing, but companies like Uber will never admit that because their priorities are monopoly first and profit later, not what’s best for urban residents. We need to decide if we want to keep letting them offer a more convenient service for a small few while making transportation worse for the vast majority, or if we’re finally going take decisive action to put them in line once and for all.