Forget borrowing money to buy a car, the concept of owning a car itself is changing. Owning a car requires committing to a long list of expenses:
- car payment and value depreciation ($1,000+ a year)
- car insurance premium ($500+ a year)
- fuel costs ($600+ a year)
- government tax, registration, and fees ($300+ a year)
- maintenance and repair costs
- parking, traffic tickets, and tolls
In rough terms, owning a car runs at least $3,000 a year with most people spending more than $5,000 a year. Consumer Reports calculates the median at $9,000 a year over the first 5 years for new car buyers.
As a couple with two cars, I’ve been thinking about trying to get by with one car in the household. Even besides public transit, consider all the car-based options that may be available:
- Renting a car, but driving ourselves. (ZipCar, RelayRides)
- Being driven around by other people who rent or own cars. (taxis, Uber, Lyft)
- Being driven by autonomous robotic cars. (Google or major auto company)
After recent positive experiences with Uber and reading about the advancements in self-driving cars, I now believe that within the next 10 years we will shed at least one car. (I doubt I would want to go completely carless with two kids and all their activities.) Some food for thought on the subject:
- With Uber, Less Reason to Own a Car – Farhad Manjoo at NY Times.
“In many cities and even suburbs, it’s becoming much easier to organize your life car-free or car-lite,” said David A. King, an assistant professor of urban planning at Columbia University who studies technology and transportation. By car-lite, Dr. King means that instead of having one car for every driver, households can increasingly get by with owning just a single vehicle, thanks in part to tech-enabled services like Uber.
- A Financial Model Comparing Car Ownership with UberX (Los Angeles) – Kyle Hill at Medium.
So there you have it… for the average American who drives 13,476 miles per year, owning a motor vehicle will cost them $12,744 per year to maintain, and the cost of taking UberX everywhere will cost them $18,115 per year. However, Americans who drive less than 9,481 miles in a year should seriously consider ditching their car, because UberX will be cheaper.
- How Do Car Ownership Costs Compare to Uber? – Uber Blog.
The math doesn’t lie. In a city with with a fast, practical (and cool) alternative like Uber, it would very much be worth your time to crunch the numbers and see how much you’re really spending on your gas, parking, maintenance, etc. and how much time you spend doing those things. Because having your own personal driver pick you up in a slick car each and every day is a hell of an appealing alternative.
- Uber vs Car Ownership – Sam Altman.
Taking uberX everywhere is now cheaper for me than owning a car (I have an expensive car, so it’s not a super fair comparison, but I still think it’s interesting).
Of course “the math” depends on where you live and how you drive, but even small to medium cities will be affected. Uber now has UberFamily (car seats) and UberPool (multiple passengers heading the same direction). Now look at self-driving car technology. If I buy a self-driving car, that’s really just another convenience/luxury that costs me more money. But what happens when Uber and Lyft don’t have to pay drivers? (Robots taking jobs again!) Fares will drop even further.
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Self-driving cabs would be amazing! The best of getting places without a car and not having to deal with an erratic human driver who’s optimizing time trying to get you to your destination at risk of your safety.
Google, get on that.
Like you said, it depends on where you live. I am in Washington, DC and I recently gave up my car to rely on public transportation.
When the Metro (train) is open,I take that.
Otherwise, I have several choices. Uber and Lyft are good. I think it’s nice to have both because your experience with one may change. For instance, I had a bad ride with Uber recently– so I switched to Lyft for a bit until I got over it. I also got a refund from Uber by emailing them.
In addition to those services, we have Car2Go, which lets you rent a car and pay by the minute. You can also take one-way trips. That’s worked out great.
For hourly rentals, there is ZipCar. I also know a lot of people like a new service from Enterprise that allows hourly rentals.
It’s definitely possible, but the more options the better.
In Chicago, in addition to UberX/Lyft and taxis, I also enjoy biking, walking or (kick) scootering and/or some combination with public transportation which gives me energy and exercise. Unlike mechanical systems, using your legs actually gives you more energy and health. Adding this into the equation, buying a second car seems fool hardy at this point. And I am 52 years old with two kids.
This might work when the technology or the services are available to you, but these are mostly urban and in larger cities. For folks who live out in the suburbs, it’s difficult.
Why not take a look at electric cars? Yes, you still need to pay insurance, but if you live in Georgia, having a Nissan Leaf with the low payments and the state/federal incentives, you pretty much only pay for the electricity and insurance on a brand new car lease for two years.
We ditched our 2nd car last December….however it works for us because our life is set up as such. My work is 5 miles away in which I’m a year-round bicycle commuter (Milwaukee, WI) with mass transit as a back-up. My wife works out of the house and my kids go to school via bus 2 miles away. We haven’t missed it since getting rid of it.
Next is to convince the Mrs. to go completely car-free 🙂
Jonathan, seems like a good followup article to compare car ownership, zipcar, uber, public transit with a few realistic scenarios and find the breakeven point. Obviously, the numbers will vary greatly depending on each scenario, but at least it’ll give an idea.
For example, I can’t imagine how renting a zipcar could possibly be cheaper. Let’s say car costs $3000/yr. Renting a car costs $50/day. That means I can only rent a car 60 days/yr, which is roughly once a week. That might be okay if you live in metro city, but not anywhere else.
Not sure about using Uber. I’m a firm believer in having a reliable POS for local use and rent a car when doing long trips.
Interesting thought, but I can’t see this being cheaper than owning a decent car. It really is not that expensive to maintain if you just stick to your maintenance schedules and clip the coupons you get from your dealership for service (Ford gives you a full service (top off all liquids, change tires, etc) for only $29 not including online rebates from the ford website. I admit I have not looked at the data, but owning a car is not expensive compared to the amount of money people waste on other stuff.
Lived with one car in Seattle for 4 years and felt stupid everytime I realized I hadn’t used it in days but was still paying for it (had paid off the loan, but there’s the depreciation/insurance/license/etc). I hated having $10-20k of my net worth stuck in a fragile vehicle and losing value.
Next time we moved I got my wish and we’re happily car-free for over a year. It’s super easy in the city. We allow ourselves to spend a bit more on housing to get the place we want, but not nearly the full difference. We use the zipcar equivalents here about once a month to do a big grocery run or outing. Haven’t even gotten close to wanting a car again.
I’d never give up my car, ever. Going wherever you want, whenever you want, with whomever you want? I can’t put a price on that.
I would definitely have a hard time going completely car-less due to the freedom issue, but not the second one in the household. Having a private driver dealing with traffic is actually quite nice.
To each their own, obviously, but I guess I’m not sure why you’d think giving up _owning_ a car is akin to giving up freedom. I can walk out my door right now and reserve any 1 of 4 vehicles in the 1 min it takes me to walk to them; get in, and go wherever I want. If they somehow weren’t available (hasn’t happened yet), I could call a car service and/or rent a longer term car from hertz or whatever. Most of the places I’d want to go that I can’t get to by bike or train are actually easier to get to by plane. With the money I don’t spend on a car, I can quite easily fly somewhere for the weekend once in a while.
Yes, agreed, to each their own. There aren’t any rental cars within a one minute walk of my house, let alone four of them. Even if there were, for a 39-mile one-way commute, Zipcar charges $9/hour or $69/day and Uber quoted $63-$84 for a one-way trip. I could be driving a brand new Porsche for that kind of money. Having a private driver would be nice, though!
Going down to one or zero owned cars is not for everyone. It doesn’t make you better or worse at financial planning. We all have different lifestyles and situations.
I’m single and have two vehicles. One is an old SUV that has been paid off forever, annual depreciation must be less than $100/yr, and I can perform basic maintenance. It’s nice having an SUV that can take on the dirty jobs. Is having two vehicles for one person extravagant? Maybe but it makes sense for me.
Uber and Lyft are definitely intriguing ideas because they make use of idle cars/seats.
In Chicago, in addition to UberX/Lyft and taxis, I also enjoy biking, walking or (kick) scootering and/or some combination with public transportation which gives me energy and exercise. Unlike mechanical systems, using your legs actually gives you more energy and health. Adding this into the equation, buying a second car seems fool hardy at this point. And I am 52 years old with two kids.
Not to mention that when it is snowy, icy on the roads and the wind is blowing way below zero, having someone else (UberX driver) deal with cleaning off the car, warming it up, parking it, and dealing with traffic, risks and costs of accidents is priceless!
I drive about 15000 to 20000 miles a year on my 1999 Honda Civic. It has 190,000 miles and I don’t think I ever spend more than about $1000 on maintenance costs per year. It’s all paid for and probably fully depreciated. I have a hard time accepting that User is a cheaper alternative to this car.
Nobody is saying that Uber is cheaper than all driving scenarios.
In theory, I think having a lot more people go carless by using Uber is great. But I think many men can lose sight of the fact that they don’t see getting into a car with strange man as a higher risk activity- which it is for many women.
I think Uber/Lyft are improving this area- I think I saw 1% of taxi drivers are women while it’s 15% for Uber/Lyft- but there’s no way for a woman to always get a female driver, even at 3am. I think if you could provide that service, it would make the idea of going carless better in practice.