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> In an era of low interest rates, the capital cost of a car is not huge. In the limit of a high utilization rate (i.e., the increased fraction of the time the
by jessriedel 9y ago
> In an era of low interest rates, the capital cost of a car is not huge.
In the limit of a high utilization rate (i.e., the increased fraction of the time the car is driving, which is probably 5-10), the capital costs are roughly given by the interest rate compounded over the lifetime of the car. Even at just 2% interest, this means a 21% savings if you would otherwise buy a new car every decade.
> I think people are also over-focusing on monetary costs;
I definitely wasn't suggesting capital costs will be the most important effects, I was just pointing out that an effective 20% discount on car purchase price is non-negligible.
- pjc50 9y agoSure, but you've also got to account for the return on capital which the equity investors are expecting. They're going to want a lot of that margin.
- jessriedel 9y agoIn this comment https://news.ycombinator.com/item?id=15940795 https://news.ycombinator.com/item?id=15940795 I described a procedure for a rideshare co-op in which the members provide their own capital, which, from a capital cost perspective, is a clear win (>20%) compared to the status quo of individually owned cars. The members may in addition decide it's even better for outside investors to provide the capital in exchange for the members paying a monthly fee, but this means the total benefit to members is even larger than the member-capitalized co-op scenario.
- Spooky23 9y agoEveryone needs to make money. The guy who owns the car, the guy who provides the software to drive it and the money guy all need their piece of the action.