3 ms·

Vehicle maintenance is not the same as depreciation.

bhupy 7y ago
I think it's debatable whether vehicle depreciation is a cost that needs to be included. For the majority of Uber/Lyft drivers, the vehicle is a sunk cost — they would have bought a car Uber/Lyft or not. These drivers use these cars for personal use when they're not driving on gigs. There are even drivers that buy cars just so that they can drive for Uber, but if Uber/Lyft didn't exist, those folks would still need to buy a car to meet their own personal transportation needs. Depreciation is going to inevitably happen to anyone that owns a car, whether or not they are a rideshare driver. It's like saying that you need to include the cost of a daily lunch in the equation.
- catalogia 7y ago
  > Depreciation is going to inevitably happen to anyone that owns a car, whether or not they are a rideshare driver. Depreciation is partially a function of miles put on the car. Rideshare drivers put miles on their cars a lot faster than they would have otherwise. Either way, sfkdjf9j3j is right. Your source doesn't account for vehicle depreciation.
  - AnthonyMouse 7y ago
    Compare the bluebook value of a typical car that might be used for this kind of work at ten years old with 120k miles (12k/year) vs. ten years old with a million miles (100k/year). The difference will end up being like $2500, because after ten years the car will be worth hardly any more than that no matter how many miles it has on it, and it can't lose more than 100% of its value due to higher mileage. ~$2500 amortized over 880k additional miles is <0.003/mile, and even less in net present cost because you don't lose it until you sell the car.
    - CydeWeys 7y ago
      Your typical rideshare car isn't nearly that old, though, and isn't going to make it to nearly a million miles either. You've cherrypicked every single variable to favor your case, and you did the calculation wrong besides (you need to use the starting value of the car, not the ending value). Do it again for a newer more valuable car, and a lot fewer miles put on it. You can easily see depreciation amounts in the thousands of dollars per year.
      - AnthonyMouse 7y ago
        > Your typical rideshare car isn't nearly that old, though Now, or when they stop using it? The average car in the US is 11.8 years old. > and isn't going to make it to nearly a million miles either This is a completely plausible number of miles for a vehicle driven full time over the course of several years. > and you did the calculation wrong besides (you need to use the starting value of the car, not the ending value). No, you use the difference in value between the car with fewer miles vs. more miles at the point where it is replaced, i.e. the amount you lost at resale by having more miles on it. The difference in value between the starting value and the ending value independent of miles is the loss due to age/time, which is a sunk cost since the car ages whether you drive it or not. > Do it again for a newer more valuable car, and a lot fewer miles put on it. You can easily see depreciation amounts in the thousands of dollars per year. Because then you're measuring the depreciation due to time (the sunk cost portion) rather than the depreciation due to additional miles, and the depreciation due to time is much higher during the first years of the vehicle's life. It is also naturally much less efficient to do that in general. How many taxi companies are you familiar with that buy new vehicles, drive them for 10,000 miles/year for two years and then sell them? You can make anything cost a lot if you're willing to waste money.
        CydeWeys 7y ago
        You're not understanding that many people are buying nice NEW cars for the purpose of driving them for rideshare, because of the requirements of the platforms, and that these new cars are then depreciating heavily (up to tens of thousands of dollars' worth in a few years) because of the absurd number of miles being put on them that absolutely trashes their resale value. The typical rideshare car here in NYC is purpose-specific (needs different plates), has an average new cost of at least $30k, and is pretty new. It's absolutely correct to count the full cost of the depreciation of this vehicle as a rideshare expense. And the average stats for cars in general in the US are irrelevant; what matters is what's being used for rideshare. You can't use old clunkers for that.
    - catalogia 7y ago
      0.003/mile is many times lower than the typical reimbursement for miles traveled. I once relocated for a job by driving my car across the country and IIRC the company reimbursed something like two dozen times as much as that (not including gas, hotel and food expenses.)
      - AnthonyMouse 7y ago
        That's because the typical reimbursement for miles traveled isn't primarily for depreciation, it's for maintenance (and also typically fuel). Corporations also like to estimate this number on the high side, or include amortized depreciation due to time rather than miles even if the vehicle purchase was a sunk cost, because business travel is often tax deductible and this allows the company to offer the employee additional tax-free compensation.
        catalogia 7y ago
        Fuel was reimbursed separately (I remember collecting all the receipts for that, food, and hotels) and I don't think maintenance would account for two orders of magnitude discrepancy. 0.003/mile is abysmally low.
        AnthonyMouse 7y ago
        If you have a vehicle which is ten years old, even with low miles it generally won't be worth very much, and you can't lose more than the remaining amount by putting additional miles on it. You can't even lose the entire remaining amount, because it will always have at least scrap metal value. This means that for a vehicle you hold for several years, the depreciation due to miles will be very low. You could easily spend many times that amount on maintenance and repairs. One transmission rebuild could cost more than the total amount of depreciation due to miles over the entire life of the vehicle. Just oil changes add up to more than $10,000 over a million miles. Maintenance is a significant expense per mile, even more if you're using "average" vehicles (as companies setting per-mile rates would) which can have significantly higher maintenance costs than the sort of vehicles people choose when they know they're going to be driving a lot of miles.

I think it's debatable whether vehicle depreciation is a cost that needs to be included. For the majority of Uber/Lyft drivers, the vehicle is a sunk cost — they would have bought a car Uber/Lyft or not. These drivers use these cars for personal use when they're not driving on gigs. There are even drivers that buy cars just so that they can drive for Uber, but if Uber/Lyft didn't exist, those folks would still need to buy a car to meet their own personal transportation needs. Depreciation is going to inevitably happen to anyone that owns a car, whether or not they are a rideshare driver. It's like saying that you need to include the cost of a daily lunch in the equation.

catalogia 7y ago
> Depreciation is going to inevitably happen to anyone that owns a car, whether or not they are a rideshare driver. Depreciation is partially a function of miles put on the car. Rideshare drivers put miles on their cars a lot faster than they would have otherwise. Either way, sfkdjf9j3j is right. Your source doesn't account for vehicle depreciation.
- AnthonyMouse 7y ago
  Compare the bluebook value of a typical car that might be used for this kind of work at ten years old with 120k miles (12k/year) vs. ten years old with a million miles (100k/year). The difference will end up being like $2500, because after ten years the car will be worth hardly any more than that no matter how many miles it has on it, and it can't lose more than 100% of its value due to higher mileage. ~$2500 amortized over 880k additional miles is <0.003/mile, and even less in net present cost because you don't lose it until you sell the car.
  - CydeWeys 7y ago
    Your typical rideshare car isn't nearly that old, though, and isn't going to make it to nearly a million miles either. You've cherrypicked every single variable to favor your case, and you did the calculation wrong besides (you need to use the starting value of the car, not the ending value). Do it again for a newer more valuable car, and a lot fewer miles put on it. You can easily see depreciation amounts in the thousands of dollars per year.
    - AnthonyMouse 7y ago
      > Your typical rideshare car isn't nearly that old, though Now, or when they stop using it? The average car in the US is 11.8 years old. > and isn't going to make it to nearly a million miles either This is a completely plausible number of miles for a vehicle driven full time over the course of several years. > and you did the calculation wrong besides (you need to use the starting value of the car, not the ending value). No, you use the difference in value between the car with fewer miles vs. more miles at the point where it is replaced, i.e. the amount you lost at resale by having more miles on it. The difference in value between the starting value and the ending value independent of miles is the loss due to age/time, which is a sunk cost since the car ages whether you drive it or not. > Do it again for a newer more valuable car, and a lot fewer miles put on it. You can easily see depreciation amounts in the thousands of dollars per year. Because then you're measuring the depreciation due to time (the sunk cost portion) rather than the depreciation due to additional miles, and the depreciation due to time is much higher during the first years of the vehicle's life. It is also naturally much less efficient to do that in general. How many taxi companies are you familiar with that buy new vehicles, drive them for 10,000 miles/year for two years and then sell them? You can make anything cost a lot if you're willing to waste money.
      - CydeWeys 7y ago
        You're not understanding that many people are buying nice NEW cars for the purpose of driving them for rideshare, because of the requirements of the platforms, and that these new cars are then depreciating heavily (up to tens of thousands of dollars' worth in a few years) because of the absurd number of miles being put on them that absolutely trashes their resale value. The typical rideshare car here in NYC is purpose-specific (needs different plates), has an average new cost of at least $30k, and is pretty new. It's absolutely correct to count the full cost of the depreciation of this vehicle as a rideshare expense. And the average stats for cars in general in the US are irrelevant; what matters is what's being used for rideshare. You can't use old clunkers for that.
  - catalogia 7y ago
    0.003/mile is many times lower than the typical reimbursement for miles traveled. I once relocated for a job by driving my car across the country and IIRC the company reimbursed something like two dozen times as much as that (not including gas, hotel and food expenses.)
    - AnthonyMouse 7y ago
      That's because the typical reimbursement for miles traveled isn't primarily for depreciation, it's for maintenance (and also typically fuel). Corporations also like to estimate this number on the high side, or include amortized depreciation due to time rather than miles even if the vehicle purchase was a sunk cost, because business travel is often tax deductible and this allows the company to offer the employee additional tax-free compensation.
      - catalogia 7y ago
        Fuel was reimbursed separately (I remember collecting all the receipts for that, food, and hotels) and I don't think maintenance would account for two orders of magnitude discrepancy. 0.003/mile is abysmally low.
        AnthonyMouse 7y ago
        If you have a vehicle which is ten years old, even with low miles it generally won't be worth very much, and you can't lose more than the remaining amount by putting additional miles on it. You can't even lose the entire remaining amount, because it will always have at least scrap metal value. This means that for a vehicle you hold for several years, the depreciation due to miles will be very low. You could easily spend many times that amount on maintenance and repairs. One transmission rebuild could cost more than the total amount of depreciation due to miles over the entire life of the vehicle. Just oil changes add up to more than $10,000 over a million miles. Maintenance is a significant expense per mile, even more if you're using "average" vehicles (as companies setting per-mile rates would) which can have significantly higher maintenance costs than the sort of vehicles people choose when they know they're going to be driving a lot of miles.