More ride-hailing services mean vehicle numbers must be regulated

Waymo, Nissan, GM, Sony, and more are coming for Uber

Paris Marx
Feb 26, 2018 · 5 min read
Source: Waymo

When most Americans consider their options for ride hailing, they’ll likely think of Uber and Lyft — if they know what you’re talking about at all. In some cities, there are other small competitors, but generally it seems that the sector has stabilized around the two big players. While that may be the case now, several companies are planning for services of their own in the coming years.

The difference is that few of these will use the traditional model of Uber and Lyft with humans driving their own vehicles and waiting for the app to connect them with a ride. Waymo, Google’s sister company, has been approved to launch a limited driverless ride-hailing service in a Phoenix suburb, which it presumably hopes to expand into other suburbs and other cities in the coming months and years.

Similarly, GM is planning to launch a service using a fleet of autonomous vehicles in a number of US cities in 2019, and Nissan plans to offer an initially limited service in Japan, which it hopes to expand by 2020. Sony is also getting into the Japanese market, but instead of taking the driverless route, it’s partnering with six taxi companies in Tokyo to build a common app so they can compete with Uber, which is struggling in the Japanese market.

However, given the number of technology and automobile companies working on self-driving cars, it would not come as a surprise to hear more of them announce plans to offer ride-hailing services of their own — and that presents a big problem for cities.

Source: Navigant Research

The growing body of research on the effects of ride-hailing services on cities does not paint a good picture. Across a number of US metros, it’s become clear that ride hailing is adding thousands of vehicles to roads at peak times, which is making traffic congestion worse, increasing emissions, slowing travel speeds, and making bus services less reliable.

If the number of ride-hailing services increases, that will mean the number of vehicles will also increase, making amplifying these negative trends. And several of the studies point out that part of the reason ride-hailing services have taken so much market share is that taxi numbers are limited, while there are no limitations on ride hailing so the number of vehicles has soared.

TNC (transportation network company) is another name for ride hailing. Source: SFCTA

In a piece for Forbes, Len Sherman compared the birth of Uber to the history of taxi companies to explain why Uber remains unprofitable — taxi companies weren’t profitable until their numbers were regulated — but it’s hard not to see further similarities between the early days of the taxi industry and Uber’s current situation.

Although a few cities legislated restrictions on the permissible number of taxi operators, the largest U.S. taxi market — New York City — remained largely unregulated well into the 1930’s. With the onset of the Great Depression, many unemployed workers turned to the taxi industry to try to earn a living. The resulting oversupply of taxis led to a collapse of fares, as taxi companies and drivers competed in a race to the bottom to attract additional customers. Driver net income and taxi company profits evaporated, the quality of drivers, cars and passenger safety deteriorated, and taxi oversupply exacerbated congestion on city streets. [emphasis added]

Isn’t this similar to what we’ve seen in the aftermath of the 2008–2009 recession, with people struggling to find good jobs similar to those they held before, so they’ve begun using ride-hailing apps to make extra money or as their main source of income because the barrier to entry is so low? And, as a result, the number of vehicles on our streets has soared, profits have evaporated, and driver income has fallen — and continues to fall, as Uber is still slashing driver pay — making outcomes worse for almost everyone. The recent suicide of a taxi driver outside City Hall in New York City shined a light on the difficulties cabbies face in the post-Uber world, but it’s hard to say whether change is coming.

In Chicago, there’s a new tax on ride-hailing vehicles to fund public transit, but that’s unlikely to reduce the number of vehicles on streets. The congestion charge being considered for New York City, which would apply to all vehicles entering a certain zone in Manhattan, has a better change of reducing overall vehicle numbers as it discourages automobile use, but whether it will effectively address congestion and the oversupply of ride-hailing vehicles remains to be seen. It’s possible that it will reduce the number of people using personal vehicles, thus reducing congestion, but ride hailing will be largely unchanged.

As more players enter the ride-hailing market, further increasing the number of vehicles on city streets, it’s time for cities to seriously consider limiting the number of ride-hailing vehicles just as they did with taxis almost a century ago. More cities are recognizing that streets aren’t just for vehicles; they need to be shared between people, cyclists, and automobiles. In order to achieve that, driverless ride hailing can’t simply take the place of personal vehicles; their numbers will have to be reduced as more space is given to people who instead choose to walk, bike, and use transit. It’s by giving more space to people, not simply automating automobiles, that we’ll create healthier, more inclusive cities.

Want a more detailed look at how many vehicles are being added to streets by ride-hailing and how they’re contributing to congestion?

It’s an exciting time for cities, and every week I curate a list of great articles about cities all around the world. To get it in your inbox every Sunday, subscribe:

Radical Urbanist

Cities have more power than ever to shape the future. In Radical Urbanist, @parismarx explores their approaches to transportation, climate change, and monopolistic tech companies to see if they’re doing enough.

Paris Marx

Written by

Socialist, traveller, urbanist. MA Geog, McGill. I write critically about tech and cities, and curate the Radical Urbanist newsletter:

Radical Urbanist

Cities have more power than ever to shape the future. In Radical Urbanist, @parismarx explores their approaches to transportation, climate change, and monopolistic tech companies to see if they’re doing enough.

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