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20 January 2017

Lyft calls for end to traffic, conveniently has an app for that

Lyft’s co-founders, John Zimmer and Logan Green, have called for the ‘End of Traffic,’ in a Medium-manifesto that supports (unsurprisingly) ride-sharing and tolls for driving on roads. With definite political and business motives, Lyft is hoping a future emerges where ride-sharing becomes the norm – zipping past drivers stuck in gridlock, and tempting them to pack it all in and fire up the Lyft app.

However, the rosy view of the future is definitely not guaranteed. Increasing levels of urbanization mean that cities are going to come under increasing pressure to accommodate their new occupants, and working remotely with teleconferencing has not had the transformational impact on transport congestion that many were predicting it would be.

The future of ride-sharing services is also not clear, and while second-place Lyft seems to have its act together (with $500m in funding from GM, no less), Uber is a frequent target for criticism – thanks to its occasionally shady business practices. Automakers might want to muscle in on the emergent space, like Tesla’s plans for the Model 3, and Alphabet/Google is a tech-titan that is on the cusp of leaping into the market too.

But the two Lyft co-founders do make some good points. Noting that Americans spend around $2tn annually on car ownership, the second largest household expense after the cost of the roof over your head, the pair say that each vehicle is only used for around 4% of its life. Zimmer and Green argue that this is highly inefficient, both in terms of cash, as well as the physical costs to cities that have been built to accommodate these vehicles – parking, bridges, capacity expansion ring roads, etc.

As for the personal cost, Lyft says that the average American will spend over 3,000 hours of their lives in traffic (125 days, or just over 4 months). That’s around $160bn in lost productivity and fuel, according to a study cited by Lyft, as well as all the environmental damage that combustion engines cause (both directly and indirectly).

So the Lyft proposal boils down to three components: based on usage data, specific streets and highways are classified as smart lanes; a federal infrastructure fund is created to provide grants to states that establish the infrastructure for smart lanes; all funds generated from the usage of the smart lanes is reinvested into transport infrastructure and public transit.

The smart lanes would incorporate the surge-pricing used in ride-sharing platforms, where they cost more during the busiest times, and can revert to free-usage when it is not busy. The other ride-sharing tactic proposed is to make the smart lanes free to use for vehicles with three or more occupants.

Pointing to the USA’s underinvestment in infrastructure, which is becoming an increasingly expensive problem with age, Lyft is essentially arguing that its low-cost proposal can go a long way towards paying off the estimated $3.6tn needed to move the USA’s grade from D+ to A, based on the American Society of Civil Engineer’s reckoning. Lyft points to White House studies that indicate millions of jobs would be created with a project of such scope.

High Occupancy Vehicle (HOV) lanes are allocated for use by vehicles carrying at least one passenger, as well as the driver. Their intent is to encourage road-users to car-pool to enjoy quicker trips, as the HOV lanes tend to take quicker routes and/or have higher average speeds than the normal lanes. Lone drivers, it is hoped, will be encouraged to use other forms of transport for their journeys.

In that current dynamic, there is no punishment for those lone drivers – only a benefit to the HOV vehicles. But the Lyft proposal would effectively penalize those single drivers, via opportunity costs, as the car-pooling option would save them time. For those drivers, the cost of sitting in traffic (in terms of their time and fuel) has to reach a tipping point where they choose to carry more passengers (somehow) in order to drive in the smart lanes and save their time and fuel.

And that’s where ride-sharing services like Uber and Lyft come in, because who wants to bother with arranging a car pool at the office when there’s an app for that! With the above argument, as well as the eco-credentials that reduced emissions would provide, the likes of Lyft and Uber would enjoy pretty widespread support for such product strategies, given the collective dislike of traffic.

Of course, there will be opponents to such transformational shifts in the automotive industry. Lyft cites an MIT study that says if its car-pooling Lyft Line service were applied to single-occupancy taxi trips in New York, the number of taxis needed in the city would fall by 75%. However, that also means you’d see a 75% fall in demand for taxi drivers, as well as all the related service industries that cater to these vehicles.

Currently, Lyft says its car-pooling option, Lyft Line, which is operational in 15 cities, accounts for around a third of Lyft’s business. It adds that most users of Lyft Line use it as a means to get to and from public transit links, and has previously published similar thought-pieces that envision a future where a majority of Lyft trips made in 2021 will be automated.

Traffic is a strange beast, that is tricky to predict and model accurately, due to the sheer number of tangential contributing factors. Some cities experience more congestion after building roads explicitly to relieve traffic, and a driver slowing down suddenly on a motorway creates a ripple effect behind them that can exponentially impact drivers on the roads. Lyft cites study after study that shows that adding more road capacity doesn’t reduce traffic.

Parking is another interesting comparison to consider, and the traffic attributed to people looking for vacant parking spaces accounts for a lot of urban congestion. Changes in parking prices can have unexpected impacts on the number of people looking to park, with cheaper parking having the potential to poach drivers who were previously using public transport, as well as cause so much demand and queuing for spaces that less people total park within a given time frame – due to over-demand or simply the experience of looking for a space becoming a disincentive.

Other questions need to be asked of traffic and autonomous vehicles. Will roads by clogged up by cars making return-to-base trips to park themselves at their owner’s home, effectively doubling the time spent on the roads each day? Will an increasing number of people taking short car trips via ride-sharing services in city centers bring roads to a grid-locked standstill? How do cities make up for the loss in parking and traffic violation revenues?