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This article rests on the premise that operating a car costs a fixed 50 cents a mile. But several uber drivers have told me the economics work out pretty well f

• jfoutz 9y ago
  in that brochure, average total cost per mile is $0.5646 @15k miles per year. I think you're looking at the operating cost per mile, that doesn't include stuff like insurance, registration, and financing. page 9, look in the middle of the green section for the cost per mile - page 8 has the row name you're looking for.
  • rm999 9y ago
    My point is the fixed costs (the ones you list) don't significantly change if you already have a car and decide to become an Uber driver. Mr Mustache didn't pay 18 dollars to drive those 36 miles, he was already going to pay for his insurance and registration.
    • alexasmyths 9y ago
      Most of the costs are not fixed, i.e. wear and tear, gas etc..
      • x0x0 9y ago
        A car is literally one giant consumable, good for approx 200k miles. Of which perhaps 100-120k are pretty reliable, and after which reliability steadily degrades.
    • slavik81 9y ago
      It's odd that insurance is a fixed cost. The probability of an accident seems like it would increase with more time spent on the road. I assume that either Uber is covering the difference in insurance, or there's a bit of moral hazard at play.
      • ghaff 9y ago
        It depends on the policy. Mine is pretty much a fixed rate. But many policies do have mileage bands.
      • rm999 9y ago
        Both Uber and Lyft cover additional liability insurance as long as the app is open. They also cover comprehensive if a passenger is in the car. https://www.nerdwallet.com/blog/insurance/best-ridesharing-insurance/#2 https://www.nerdwallet.com/blog/insurance/best-ridesharing-i...
      • astura 9y ago
        My insurance company asks me approx how many miles I drive per year and also how far away I live from work (because I list commuting as the purpose of my car). I assume those variables are included in my premium and my (very low) premium would be higher if I drove more or lived far away from from work - my commute is only 4 miles. I also assume the Uber driver would have to tick off "business" as their car's purpose and your insurance may go up just because of that check mark, no matter if the mileage was higher or not.
        • SilasX 9y ago
          Right, insurance does care how much you drive, but there are costs to being fine-grained about how you measure it, so they usually lump in everyone below ~30k miles/year and don't bother to count the differences there. I remember entering 10k vs 15k miles per year and the quote was the same for Geico. Of course, you're absolutely right, and insurers have been slow to account for this parameter; the startup MetroMile exists solely because regular insurers overestimated what a difference the mileage makes. (MetroMile charges by how much you actually drive.)
      • 9y ago
    • jfoutz 9y ago
      I mean, it's your source. You're free to disagree with it. the cost per mile clearly goes down as milage goes up. as witnessed by the 10/15/20 brackets of driving. but 20 cents a mile isn't even close.
    • cma 9y ago
      Insurance isn't a fixed cost, they want a yearly mileage estimate.
  • ghaff 9y ago
    The argument is that those costs don't matter so much if you're going to be owning the car anyway. But cost accounting is complicated. The reality is that, for a car used a minority of the time for taxi service, the number is somewhere in between the IRS cost/mile and the bare minimum fuel + standard maintenance. For one thing, the car will get into higher maintenance costs and will need to be replaced sooner than if you just used it for yourself.
  • slavik81 9y ago
    I would expect that an Uber driver would be doing far more than 15k miles per year. That's just normal usage. You're also mixing up your accounting. The parent was discussing marginal costs, and you're discussing average costs. The marginal cost is what's used for making economic decisions, like deciding to drive for Uber or not.
    • grogenaut 9y ago
      My wife does 3-4 days a week for prime now. On track to hitting 12k miles this year. Just as a data point
      • astura 9y ago
        The average driver between 20-50 drives around 15,000 a year. https://www.fhwa.dot.gov/ohim/onh00/bar8.htm https://www.fhwa.dot.gov/ohim/onh00/bar8.htm
        • grogenaut 9y ago
          The average driver implicitly isn't using ride sharing so there's really no relationship between that stat and this discussion other than it'll be closer to your number than to the average daily miles of a glactic starship captain. A better number would be a taxi driver.
    • jfoutz 9y ago
      From op's data, 10,000 - $0.7354 15,000 - $0.5646 20,000 - $0.4944 I just don't see how you get that marginal cost down to $0.20, yes mile n+1 is a little bit cheaper than mile n. and sure, let's pretend that high milage cars used cars sell for the same as low milage cars. so financing is fixed. I just don't see how you can get regular maintenance and gas and insurance down to 20c/mile.
      • rm999 9y ago
        You're looking at average cost, which includes half-ton pickups and large SUVs. Look at page 6, which contains small and medium sedans.
• amorphid 9y ago
  Quick and dirty math. Let's say a new Kia Soul has 200K miles of useful (as an uber car) and costs $20K USD. The driver drives 2500 miles per month, getting 25 miles per gallon $4/gallon. Insurance is $100/month. And every 5000 miles there's $100 of maintenance to do. 20,000 USD / 200,000 miles - 10 cents per mile. 200,000 miles / 25 mpg = 8000 gallons 8000 gallons * $4/gallon = $32,000 $32,000 USD / 200,000 = 16 cents per mile 200,000 miles / 2500 miles/month = 80 months 80 months * 100 insurance/month = $8000 $8,000 / 200,000 miles = 4 cents per mile (200,000 miles / 5000 miles) * $100 maintenance = $4000 $8000 maintenance / 200,000 miles = 2 cents per mile 10 + 16 + 4 + 2 = 32 cents per mile. That's my best guess while typing on my phone in a Chipotle. 32 cents sounds like best case, so 50 cents seems like a conservative & realistic plan. Cars have ways of eating ones money in expected ways, and I didn't account for costs associated with driving for Uber/Lyft, such as needing a good cell phone plan, self employment taxes, etc. Did I make any math errors? Anyone wanna tweak those numbers to be more realistic?
  • ams6110 9y ago
    Need to include interest on the $20,000 purchase. Most Uber drivers aren't buying new cars for cash. Even if they are, it's fair to include the opportunity cost.
    • astura 9y ago
      A five year $15,000 loan @2.5% interest is $972.63 interest over the life of the loan. Round it up to an even $1,000. You also should count sales tax, which looks like 7.5% in California,so an extra $1,500 total. Those are fixed costs but your car won't last nearly as long if you drive for Uber vs if you don't. You also don't have the choice of driving your car into the ground if you want to continue to drive for Uber.
      • bunderbunder 9y ago
        According to Bankrate, 2.5% interest isn't a reasonable assumption these days. Looks like it's more like 4.5%, and I presume that's assuming you have really good credit. That said, even at 6%, you're only looking at $1,172 over the life of a 5 year loan, so I agree that it's a fairly negligible difference for the purposes of this calculation.
• rectang 9y ago
  The AAA analysis is a misleading sales document which fails to factor in risk, pretending that the insurance they're trying to sell you is sufficient. It doesn't take into account things like lost wages and other opportunity costs, catastrophic injuries, denied or underinsured claims, and so on. The MMM article makes exactly this point -- it is hard to calculate the cost of driving. We're even failing so miserably in this thread...
• belorn 9y ago
  > because they already need their cars If you take out the car, insurance and registration out of the revenue-cost system of being a uber driver, then those costs still need to be paid. How? If the default is that they are unemployed and need a car then they can't have one. You can't have a cost without a revenue source (support from the state don't count here since any benefits would be lost at the point of gaining a revenue above minimum standard). If they intend to use the revenue from being a driver, then the cost are added to that system and one have to account for the significant lower income in return for fulfilling the outer system "need" to have car. If a person already have a job that require a car and they want to work a second job as a uber driver, then you can subtract the fixed car cost to either job. Similarly a person could have saved up money in advanced to pay for the fixed costs for the duration of the uber driving, similar to an investment, but that result in a limited cost saving for only as long as that initial capital will last.
• mcguire 9y ago
  When you have to replace your current car, do you plan on getting your next car free?