Even a Mobility Revolution Can’t Crack American Car Culture

(Bloomberg Businessweek) -- The end of February marks the close of a small chapter in the story of American transportation: the shutdown of the North American operations of Share Now, the most prominent car-sharing business in the U.S. The service existed in various forms for about a decade, leaving its cars—many of them go-kart-esque vehicles covered in loud advertising for its Car2Go brand—parked in the streets of 14 U.S. cities. Customers used smartphone applications to find and unlock them, renting them for the afternoon or just to drive across town. Share Now purported to offer an alternative to personal car ownership—a striking proposition given that its owners, the European automakers Daimler AG and BMW AG, sell luxury automobiles.

Share Now isn’t the only one struggling. A handful of deep-pocketed investors made big bets that the end was near for the deep-seated affection Americans have for their cars. Lyft Inc. and Uber Technologies Inc., which have pushed the taxi alternative known as ride-hailing, have terminated employees since going public early last year, and shares of both companies trade below their initial prices. Scooter companies Bird Rides Inc. and Lime Micromobility have also cut jobs and shut down operations in multiple U.S. cities. Getaround Inc., a car-sharing startup valued by investors at well over $1 billion, said in January that it would cut a quarter of its staff.

There’s also little evidence the mobility industry has decreased the number of car owners—or the number of miles people drive. In research published in January, transportation consultant Bruce Schaller examined the top eight cities for ride-hailing since the mid-2000s. He found no statistically significant reduction in car ownership in any of them. Nationwide, the average number of vehicle miles traveled per person—a key stat if you’re concerned about carbon emissions—has risen about 8% in the past decade, according to federal statistics. Only seven states have seen declines over that period, and they’re not the ones with the dense cities favored by mobility startups. The biggest drop was in Oklahoma.

Hoping that fortunes could be made in helping accelerate the demise of traditional car ownership, venture capitalists took crash courses in urban planning and poured billions of dollars into various smartphone-enabled transportation innovations. They claimed common ground with government officials eager for the cleaner air and relief from congestion that would come from a reduction in car travel. Indeed, any serious response to climate change probably has to come with a reform of the transportation system, which accounted for 29% of carbon emissions in the U.S. in 2017, according to the Environmental Protection Agency. Passenger cars and light-duty trucks produced more than half of transportation-related emissions.

Optimism about the traction of ride-hailing, the dizzying fad of scooter-sharing, and the seeming imminence of self-driving cars has inspired people to indulge their utopian sides about the potential of mobility businesses to reshape American transportation. Lyft co-founder John Zimmer said in 2016 that private car ownership would “all but end” in major American cities by 2025. Travis VanderZanden, chief executive officer of Bird Rides, declared in 2018 that his company was involved in the “biggest revolution in transportation since the dawn of the Jet Age.”

It’s premature, of course, to call these companies commercial failures. Uber and Lyft are worth a combined $80 billion, and bike- and scooter-sharing seem like durable aspects of urban transportation. Several smaller car-sharing companies will continue in Share Now’s absence. Mobility companies argue that it’s too soon to assign them any grade besides incomplete. “It’s important to take into context that we’re fighting over 100 years of car ownership,” says Lilly Shoup, Lyft’s senior director of transportation policy. “Our cities, our infrastructure, our institutions, our highway programs—they’ve all been focused on this concept of driving everywhere you need to go in a private car.”

Americans have shown some signs of wavering in their devotion to their automobiles. Per-capita car travel remains below the peak levels of the mid-2000s. Also, the percentage of all Americans under the age of 70 with driver’s licenses has dropped over the past decade. This trend has been most pronounced for people under 23, perhaps foreshadowing a durable cultural shift. But the biggest moves away from cars came in the aftermath of the financial crisis, and that trend has actually reversed since the emergence of the new mobility companies.

It’s become a common story in tech. Startups make optimistic predictions about their positive social impact. The promised societal goods fail to materialize, unintended consequences arise, and those startups that do survive develop into pretty conventional profit-seeking enterprises. “They’re trying to offer the best service they can, they’re trying to grow, they’re trying to be profitable,” says Emily Castor Warren, a former executive at Lyft and Lime who is now director of policy at transportation-planning firm Nelson\Nygaard Consulting Associates Inc. “We can’t expect that they’ll be guardians of the public interest.”

One reason mobility companies have made little impact on car ownership rates is that they attract people who weren’t driving anyway. Scooter- and car-sharing platforms have flocked to dense downtown areas where they can count on tapping into car-less populations. When Uber and Lyft riders are asked in surveys how they would have completed a particular trip had ride-hailing not been available, they’re most likely to say they would have taken public transportation, walked, or stayed home. According to Schaller, car owners tend to use the services mostly in situations where they worry about finding cheap parking or plan on getting drunk.

Among those populations who use them, mobility companies have inspired enthusiasm other brands would envy. Kelly McCann, a resident of Washington, D.C., says she was “devastated” by the news that Share Now was shutting down. “I was one of the first people to sign up, and I used it pretty much every day,” she says. But McCann also says she’d gotten rid of her own car years before the service came to town and had been getting around just fine on her bike and public transportation.

Overall, car-sharing never expanded far beyond the Kelly McCanns of the world. Share Now’s fleet in the U.S. totaled about 7,000 vehicles, a bit more than the number of Mercedes-Benz cars that Daimler sold on an average day last year. Despite the billions poured into scooter-sharing and all the attention drawn to its propagation in a handful of downtown areas, those companies also remain minuscule compared with the scale of transportation systems, often because local officials cap the number of vehicles they allow.

The verdict on the one new mobility experiment that has gotten big enough to really matter—ride-hailing—is more disheartening. Numerous studies show that Uber and Lyft increase traffic congestion and carbon emissions, largely because of pervasive “deadheading”—drivers cruising around until their apps match them with passengers. In a study published in December, the California Air Resources Board found that because of deadheading, ride-hailing companies created about one and a half times the carbon emissions per passenger mile that private car travel did.

Uber and Lyft have both attempted to offset these trends by pushing riders toward carpooling, a part of their business that has the added advantage of being more profitable. But both drivers and riders seem to prefer single-person rides. The more that pooled rides resemble buses in terms of experience and price, the more transportation analysts fear they’ll lead to a so-called death spiral for public transit, where declining ridership starves transit agencies of resources, leading to worse service, which inspires even more riders to seek alternatives.

Public transportation has been suffering. Total ridership in the U.S. and Canada is lower than it was in 2006, and down almost 8% from its peak in 2014, according to the American Public Transportation Association.

Studies have shown that ride-hailing is associated with reduced public transportation use in some cities, though the data are mixed. But most policy experts see bigger forces than ride-hailing at play. “You really can’t disentangle this issue from the question of the housing crisis,” says Warren. “As people get pushed to the periphery where there are fewer viable public transportation options, those people become increasingly forced to use cars.”

Even though mobility companies have inspired controversy at times, introducing novel consumer services was probably the easy part. People who rely on cars are understandably reluctant to back public policies that would make their lives less convenient. One of the most closely watched debates has been an effort in California to override local zoning laws to encourage high-density housing near transit lines. The measure has failed three times since 2018, most recently in January, when its backers couldn’t attract sufficient support in the state legislature.

At times, the companies seem to blame U.S. transportation culture for their troubles. When Share Now announced late last year it was leaving North America, it cited the continent’s “rising infrastructure complexities” as well as operational costs, which someone familiar with the company’s business says was a reference to the deals it had to cut with cities to pay for street parking in bulk. In an email, a company spokeswoman specifically cited U.S.-style personal car ownership as another factor. The company will continue to operate in 18 European cities.

Lime, which launched its scooter operation in California, now does more business in Europe than in the U.S., primarily because European officials are pursuing policies to restrict car use, according to David Spielfogel, the company’s chief policy officer. “There’s a very tangible movement” in Europe, he says, “and I just don’t see that in the U.S.”

Efforts are afoot in a handful of American cities to reengineer public spaces with these goals in mind. New York and San Francisco recently closed major streets to private car traffic. New York state also passed a plan last year to charge drivers to enter the densest parts of Manhattan, which is set to go into effect in 2021, though it may be delayed because the federal government has been slow to approve it. San Francisco, Seattle, and others are considering versions of that congestion-pricing policy.

Uber said last year it would spend $10 million lobbying for sustainability policies, an effort dedicated largely to promoting congestion pricing. While such a policy would push up prices for ride-hailing, the company said it stands to benefit from an overall reduction in traffic.

The U.S. does have one mobility success story: Seattle. The share of residents driving to work dropped from 50.5% to 45% from 2012 to 2018, according to the city’s transportation department. This was accompanied by an increase in residents taking public transit or walking to work. According to the city and outside experts, these changes are the result of Seattle’s long-term investments in infrastructure and policies that have led to denser real estate development. Business innovation can drive investment, says Adie Tomer, a fellow at the Brookings Institution, but public policies like Seattle’s are more likely to spur change. It’s just less interesting to talk about parking policy, zoning reform, and extra bus routes than smartphone apps. “The land use drives the demand, not the other way around,” says Tomer. “We lost sight of that because the tech was so new.”

To contact the editor responsible for this story: Howard Chua-Eoan at hchuaeoan@bloomberg.net

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