I think Uber is the most incredible business ever made:
Facts about cars:
- The average car has a utilization rate of 4%, or roughly 1 hour out of a 24 hour day
- There are 260MM cars registered in the United States.
- Assuming an average value of just $5,000 per car — truly a WAG — American cars are collectively worth $1.3 trillion. (~50MM cars were sold in the last 3 years, which make up a substantial portion of total car values.)
- Increasing car utilization to 20% from 4% could theoretically result in 80% fewer cars in the U.S.
- This would free up approximately $1 trillion of capital currently tied up in mostly dormant vehicles across the United States.
Any large improvement in utilization rates will undoubtedly require something like Uber (car-as-a-service) plus driverless capabilities. But I really do think this the future.
Already, Uber has had a tremendous impact on at least one industry. Guess which one?
After growing at a 9.5% CAGR from 2007-2014, the outsize economic returns earned by the beneficiaries of a government-sponsored monopoly have declined precipitously to 2016. The world is better for it.
- The Big Three are living on borrowed time. Legacy costs (pensions) will be spread over fewer new cars produced.
- The glory days of car insurance are behind us, as the combination of safer/fewer cars will result in substantially less risk, and substantially lower car insurance premiums/capita.
- Car insurance could theoretically be managed via gas tax, as once argued in the book Invisible Bankers, reducing SG&A in car insurance and resulting in lower total premiums.