redesign | transport: Uber’s transportation revolution is part of something much bigger

Uber has revolutionized urban transportation in the past two years. The change, so far, is just the tip of the iceberg.

Uber and other alternative transportation providers such as DriveNow, car2go and more than a dozen bike-sharing services will combine with public transportation to completely reinvent the urban core.

Among the changes we can expect in urban cores:

  • Less congestion.
  • Fewer people circling for parking.
  • Parking lots becoming much less valuable, and the spaces being put toward more valuable uses.

car2go is a service that allows one-way car rentals within a city. Instead of having to return a car where you found it, which is the case with Zipcar, you return it to a designated zone and metered parking is included. At 41 cents a minute, the cost is often competitive with public transportation. In the United States, car2go operates in Seattle, Portland, Austin, San Diego, Denver, Los Angeles, Washington, D.C., and a few other cities. It doesn’t operate in San Francisco because of the city’s refusal to grant the company the necessary permits.

However, DriveNow is operating in San Francisco. Its model is a crippled version of car2go. Instead of being able to drop off a vehicle anywhere in a zone, you return it to one of many designated parking locations. (This is getting expanding now in less parking-challenged areas of San Francisco, such as Potrero Hill.) For example, I can use DriveNow to get from my place in Nob Hill to the San Francisco airport for $12 plus taxes. I leave the car at an off-airport location and then someone else picks it up. DriveNow plans to launch soon in Seattle. I expect that it will follow the car2go model there, because of the city’s cooperation.

These alternative transportation services are what economists call complementary goods — the existence of one reinforces the benefits of another. If I rent a car2go and someone else takes it, I can always Uber back. Without Uber, I’d have to worry about being stranded if someone took “my” car. If Uber has surge pricing, which can greatly increase prices during peak demand, I can grab a car2go to get where I need to go. (This reduces demand on Uber, thereby reducing the surge.)

In a similar way, such alternative transportation services increase the utility of public transit. Can’t get to the subway without three bus connections that tack on 40 minutes? Take UberX to the bus stop and ride the remaining way on the train. When traffic is heavy, subways provide a good alternative to all of these services.

Cars are a terrible product that we’ve become accustomed to because there wasn’t anything better. The typical car sits unused more than 90 percent of the time. Cars fit our average transportation needs, not our specific need at a given moment. Going two miles downtown is a very different problem from going 50 miles to the suburbs. That two miles might end up costing 25 extra minutes circling for a parking spot.

Most people can’t afford a motorcycle for city driving, a luxury car for leisure trips, a convertible for sunny days and a truck for hauling goods. Moving to a rental economy allows you to pick the right mode for the specific task at hand, with a good chance of saving money in the process.

It’s not just urban residents who benefit; the combination of these services and public transportation will reduce the need for travelers to rent a car.

Consider my recent trip to Seattle:

  • I took the light rail in from the airport.
  • I took UberX around downtown Seattle.
  • I used car2go to drive to a friend’s party.
  • I drove a car2go to the light rail station to get back to the airport.

Renting a car would have cost about $40 a day and parking it would’ve cost another $41 plus taxes. That’s a lot of money to spend to have a car that would have gone unused most of the trip.

These services encourage the economically efficient use of physical assets. If the utilization of each car goes up, which is great news for the environment. Each car takes an enormous amount of raw materials, chemicals and other resources to produce. The biggest loser in this transportation revolution is likely to be car companies that refuse to acknowledge this fundamental shift.

Two companies that aren’t burying their heads in the sand are Daimler and BMW. car2go is a Daimler subsidiary and DriveNow is part of BMW. Both companies recognize that they aren’t car companies — they are transportation companies.