Is It Cheaper To Buy A Car Or UberX Everywhere? Here’s The Math

TechDrive Guest Post

Kyle Hill is the founder of @HomeHero and previously @Flowtab. He is a bona fide aesthete and triathlete, obsessed with marketplaces. #GoBucks. You can follow him on Twitter here and Facebook here.

Can Uber really replace car ownership in US cities? Here’s a look at the numbers…

It’s long been hailed by Uber CEO Travis Kalanick that their on-demand transportation service will eventually replace car ownership entirely. This de-centralized business model is so successful that it is now seeping into other industries, for example p2p package delivery. In fact, he believes one day all the Uber cars on the road may be driving themselves. As technology and competition drive down the costs of peer-to-peer ride-sharing, there’s no denying that we as consumers win. So what does this mean for the classic American dream: house, car and children? I’m here to tell you, one of these prizes might change.

About two years ago I sold my 2000 Lexus GS 300 and replaced it with a sleek single-speed Pure Fix commuter bike. I could’ve easily sold it on LeoList, an advertisement site, but I already had someone interested in buying the car off me. Two years later, I still bike to work every morning. And for anything over 3–5 miles, or when I’m just not feeling up for the workout, I call an Uber. I love the safety and convenience of Uber, the overall quality of their cars, and especially as a young black male, the peace of mind that I’ll never again have to deal with the police.

Before I sold my car I did some calculations to validate my suspicion that owning a car was a huge and unnecessary financial liability. Was it really feasible to ditch the DMV and rely strictly on Uber? After all, I lived in Los Angeles, the most sprawled-out city in the country-a city built on the backbone of the internal combustion engine. This would require some Googling and a little math.

The costs of annual car ownership

According to AAA, the average cost of purely owning and driving a mid-sized sedan in the US is $8,876 as of 2014, broken into six categories below:

  • Payments / depreciation ($4,260)
  • Fuel costs ($2,130)
  • Interest ($976)
  • Insurance ($887)
  • Maintenance and repairs ($355)
  • Registration and taxes ($355)

Small sedans

Typical model: Chevrolet Cruze, Ford Focus or Honda Civic
Cost per mile for gas, maintenance and tires: $0.16
Total cost per year (assuming 15,000 miles driven a year): $6,957

Medium sedans

Typical model: Ford Fusion, Honda Accord or Toyota Camry
Cost per mile for gas, maintenance and tires: $0.19
Total cost per year (assuming 15,000 miles driven a year): $8,839


Typical model: Dodge Grand Caravan, Honda Odyssey or Kia Sedona
Cost per mile for gas, maintenance and tires: $0.21
Total cost per year (assuming 15,000 miles driven a year): $9,753

Large sedans

Typical model: Chrysler 300, Ford Taurus or Nissan Maxima
Cost per mile for gas, maintenance and tires: $0.21
Total cost per year (assuming 15,000 miles driven a year): $10,831

Large SUV’s

Typical model: Ford Explorer, Jeep Grand Cherokee or Nissan Pathfinder
Cost per mile for gas, maintenance and tires: $0.23
Total cost per year (assuming 15,000 miles driven a year): $11,039

Luxury sedans and SUV’s

Typical model: Porsche Cayenne, Jaguar XK, GMC Sierra or Infiniti QX56
Cost per mile for gas, maintenance and tires: $0.31
Total cost per year (assuming 15,000 miles driven a year): $15,250

Now we have to add additional costs for speeding and traffic tickets. The National Motorists Association (NMA) suggests that Americans could spend up to $15 billion each year on traffic tickets, or 50 million traffic tickets. This comes out to about one $75 ticket per year, per American. The NMA also estimates that Americans will get one speeding ticket every six years that will lead to increased insurance surcharges costing around $300 per year amortized over your lifetime. If you want to find out how traffic tickets could affect you navigate to this website to learn more about it. We already accounted for insurance costs in the calculation above, so we won’t add this twice – see more about cheap uber insurance to see more about their taxi insurance policies.
  • Traffic tickets ($75)

Now for parking. According to ABC, the average American spends $1,300 a year on parking costs, higher than insurance or maintenance.

  • Parking ($1,300)

The last cost is probably the one Americans ignore the most, and that’s the value of your time. Every hour spent behind the wheel with your attention on the road is time you could be spending exchanging emails from your smartphone, preparing notes for a meeting, reading news or researching a new topic. This is simply time of lost productivity. According to Bureau of Labor Statistics, the US Average Hourly Earnings Rate is $24.45 per hour, with the highest being utility services at $35.45 and the lowest being leisure and hospitality at $13.86. As of 2011, the national average one-way daily commute was 25.5 minutes, or 51 minutes per day, 4.25 hours per week, 17 hours per month, and 204 hours per year. Multiply that by the average earnings rate and we can see that the average American loses out on $4,987 earnings per year due to lost productivity in their daily commute. Let’s assume in the alternative option (Uber) the user is productive 50% of the trip, so we will discount the opportunity cost to $2,493 per year.

  • Opportunity cost ($2,493)

If we add all these costs up, we can see the average costs of owning a motor vehicle in the United States is around $12,744 per year ($1,062 per month). This falls in line with Consumer Reports who estimated median annual car costs to be $9,100 (not accounting for opportunity cost)?-?with small cars and Priuses around $5,000 and luxury cars and SUV’s around $16,000.

The costs of annual Uber usage

Now it’s time to grab your phone, drop a pin, and let Uber take over. Keep in mind there are a slew of other ride-sharing companies out there, but we’re using Uber for simplistic sake and because there’s more data out there on this specific company. Uber, like many of its competitors, offer a unique combination of reliability, convenience and luxury at 20–30 percent the price of a cab. Let’s assume you take them everywhere (school, work or even the club). But first, we have set a few assumptions:

  • User lives in one of the 64 cities where Uber is available
  • User only uses UberX (~20% cheaper than taxi cabs or Uber Black)
  • User uses no other mode of transportation other than UberX
  • User has flexibility in schedule to avoid surge pricing
  • User is achieving 50% of full working productivity during the ride
  • User is indifferent about 5-10 minute wait time for UberX vehicle

The base fare of Uber in Los Angeles is $0.80, plus $0.21 per minute and $1.10 per mile, as seen on their rate chart:

According to the U.S. Department of Transportation Federal Highway Administration (FHWA), the average American driver logs 13,476 miles per year on their cars, with an “average commute distance” of 25.2 miles. If you’re curious, 13,000 miles is about two cross-country trips from from New York City to Los Angeles and back. Lastly, the US Census Bureau estimatesan “average commute time” of 25.5 minutes (with the highest being Chicago at 31.9 minutes and the lowest being Columbus, OH at 21.8 minutes). Without much more data here, we will have to assume average commute time to work is comparable to commute times to all other destinations (grocery store, bars, clubs, doctors office, friend’s houses, etc).

Now we know that the average American takes about 534 trips per year in their car, or 1.47 per day (2.05 per weekday). They will spend 13,566 minutes in their cars commuting places throughout the year, or 37.1 minutes per day (52 minutes per weekday). These numbers sound pretty reasonable.

At a rate of $1.10 per mile, $0.21 per minute and $0.80 per trip, the average American will fork up $427 to Uber in base fare fees (534 * .80), $14,823 in mileage fees (13,476 * 1.1) and $2,880 in time fees (534 * 25.5 * .21).

  • Base fare fees ($427)
  • Mileage fees ($14,823)
  • Time fees ($2,863)

This brings total costs to $18,115 per year ($1,509 per month) if you used UberX to drive everywhere. Unfortunately, even without car payments and depreciation, fuel costs, interest, insurance, maintenance and repairs, registration and taxes, parking fees, speeding tickets and opportunity costs, Uber is still slightly more expensive for the average American who drives 13,476 miles per year. In this case, it would be cheaper to own and drive the medium-sized sedan.

The mileage crossover point

Averages are great, but the real point is for everyone to do this calculation on their own, using a model similar to what we created. I have condensed both models to more digestible forms below:

costs_ownership_year =

costs_payments_year + costs_fuel_year + costs_interest_year + costs_insurance_year + costs_repairs_year + costs_taxes_year + costs_parking_year + costs_tickets_year + costs_opportunity_year

costs_uber_year =

(miles_year / average_commute_distance * .80) + (miles_year * 1.10) + (miles_year / average_commute_distance * average_commute_time * 0.21)

Using the model we have we can manipulate some of the variables to come up with a crossover point?-?in this case 9,481 miles?-?where the costs of owning a car and the costs of using UberX are exactly the same. Assuming you have a medium-sized sedan that costs you $12,744 a year to own and maintain, and you drive 9,481 miles per year, then you should be indifferent about keeping your car.

Example #1 (Ownership is cheaper)
Annual mileage: 13,476 miles
Average commute distance: 25.2 miles
Average commute time: 25 minutes
Cost of ownership: $12,744
Cost of UberX: $18,115.06

Example #2 (Equal)
Annual mileage: 9,481 miles
Average commute distance: 25.2 miles
Average commute time: 25 minutes
Cost of ownership: $12,744
Cost of UberX: $12,744

Example #3 (Uber is cheaper)

Annual mileage: 5,000 miles
Average commute distance: 25.2 miles
Average commute time: 25 minutes
Cost of ownership: $12,744
Cost of UberX: $6,721


So there you have it… for the average American who drives 13,476 miles per year, owning a motor vehicle will cost them $12,744 per year to maintain, and the cost of taking UberX everywhere will cost them $18,115 per year.

However, Americans who drive less than 9,481 miles in a year should seriously consider ditching their car, because UberX will be cheaper.

Whether it’s UberX, UberPool, Lyft, LyftLine or Sidecar, the factors that will determine whether these services are actually cheaper really come down to how many miles you drive in a year. If your metrics differ substantially from mine, I encourage you to enter your own variables into the model and come up with your own conclusions.

*** Disclaimer: I am in no way affiliated with Uber ***

There are 6 comments

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  1. justaguy

    Great analysis! Perhaps you can do an analysis of Uber driver incomes to bust the myth perpetuated by Uber that UberX drivers can make out like bandits.

    Ride-sharing business model is based on regulatory arbitrage, dubious insurance practices, and exploitation of drivers they’ve lured into signing-up by making fraudulent claims of potential earnings. This war of attrition between Uber and Lyft has led to the drivers earnings being slashed as both Uber and Lyft try to offer ever lower rates to the riding public. The drivers are waking up and are uniting to raise awareness of their woes and bring an end to their exploitation. Visit
    http://www.UberPeople.net to learn more about the true state of ride-sharing.

  2. Arush Sehgal

    i think you forgot that Ubers come with a driver, so you’d need to cost in a full-time driver to counter

  3. liberal sodomy

    uber’s whole game now is to offer riders fares that are so low that
    only a math-challenged or truly desperate person would provide
    services in THEIR personal automobile for less than minimum wage.

    They are STEALING the auto equity and gas money of their “partners”
    under the guise of employment

    Whatever the driver “earns” is lost in gasoline and auto depreciation.

    Expect service levels to COLLAPSE in the very near future.

    Free water and gum? Open the door? Clean car? Help with you luggage?

    Not at these rates.

    Passengers are now LUCKY if anyone shows up at all.

    Especially for the short trips.

    Think you can pay drivers to drive their own cars 50% less than taxi
    cab fares and maintain any level of service whatsoever?

    Think drivers will safely and happily pickup your brats from school
    for 3 dollars?

    Or take you to dca or union station for 8 dollars?

    Think again.

    Stay out of MY car, you cheap, self entitled bum.

    Take a bus.

    Riders will soon be lucky to find a driver with a 4* rating and the
    quality and cleanliness of the cars will soon rival those of taxicabs.

    The riders are now HATED and RESENTED by the drivers as a result of
    uber’s sadistic attitude towards its “partners”.

    These criminals are such dispicable cowards that they have no physical address

  4. Ben

    Wow, a friend of mine is an Uber driver in LA, has been a driver for +10 years and says being an Uber driver has definitely been good for himself financially.
    Interesting what kinds of negative comments Uber gets here – wonder who is behind that and what their motivations are…
    As far as I can tell as customer of Uber: I’m happy with it.
    And the driver I know, and his friends who’re drivers, are also happy.
    So if customers and partners are happy… who’s doing the complaining?

  5. Peter

    I’m okay with the assumptions in general and realize some are necessary. However, the one I have the biggest problem with — by far — is the “User has flexibility in schedule to avoid surge pricing” one. Surge pricing happens all the time, and the concept, to me, is ridiculous. You can make the “supply and demand” comparisons all you want, but to me it seems like a bait & switch: “oh, we have cheap fares, but only when you don’t need a ride.”

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