In a very short amount of time, Uber Technologies has emerged as a major economic force and an investor’s darling. Uber announced this week that it would seek a $68 billion valuation in its latest round of funding. If it is able to achieve that valuation, this means that it will be valued more than Ford, Honda, and General Motors.
The ridesharing company has been a favorite of many internet investors, and Wall Street investors are increasingly taking a longer look as well. But is it possible that Uber could be worth more than car manufacturers that make and supply the automobiles that support Uber’s business model?
Only time will tell whether there will be a bubble in the shared economy, or if it will continue to grow to supplant private car ownership even further. However, the rise of Uber to the point where we’re asking these questions does say some things about what the American consumer is looking for in his or her transportation options.
Americans Value Convenience
Uber has made the experience of using its services as easy as possible. All you need is the app and an internet signal to get started. You can pick the type of service you need and find a driver in your area who can transport you from Point A to Point B. You then pay online and the transaction is complete. It beats trying to hail a cab or find enough cash – tip included. It may also hold some advantages over car ownership.
The main advantage of private car ownership is convenience and cost. However, if you live in a city or don’t take many long trips, the cost-benefit of car ownership may not be worth it. The ridesharing industry has said that it is as much as fifty percent cheaper to rideshare than to hail a cab; in certain circumstances, it might be cheaper to rideshare than to own a car as well.
In most cases, though, this is not the case. This is why the Uber valuation has been met with some skepticism. However, car owners should see if there might be some ways to reduce their overall total cost of ownership to ensure convenience and budget.
For example, annual registration renewal is a cost no car owner can avoid. eTag.com’s new online vehicle registration renewal program enables motorists in California to pay their registration over time to make it more affordable on a monthly basis. Vehicle owners should look for this and other tech solutions to better manage ownership costs.
There’s no question that Uber and ridesharing have changed the conversation about how Americans travel. We’ll see how far that conversation has changed if Uber continues to become valued more than these major car manufacturers.