New Ridesharing Economy in Need of Reality Check as Robotic Taxis Threaten Its Long-Term Growth

The new ridesharing economy continues to beat expectations as ABI Research forecasts global bookings to exceed $100 billion by 2020 and $300 billion by 2030 at an average growth rate of 18%. But the transportation industry may be in need of a reality check. Many car OEMs are now aiming to gain back control of the future automotive landscape through advancements in driverless car technology. This will enable driverless taxis to overpower ridesharing in the long-term.

“There is no doubt that the ridesharing ecosystem will mature, with Chinese ride-hailing service Didi Chuxing merging operations with Uber in the region and Uber reaching an incredible milestone of two billion rides this past June,” says Dominique Bonte, Managing Director and Vice President at ABI Research. “Yet, however promising this new car sharing economy looks, its growth will eventually slow.”

Big brands and niche startups like Opel’s CarUnity and carpooling operations like BlaBlaCar and Scoop Technologies, in which BMW i Ventures recently invested, are currently thriving. But ABI Research finds ridesharing growth will slow as it becomes more challenging to recruit users. Its business model of aggressive marketing and subsidized driver recruitment resulting in huge losses, as well as fundamental cost structure limitations, will prevent ridesharing from scaling into a mainstream use case and, as a result, fail to lead to a significant decline in car ownership.

To adapt to the changing competitive landscape, many car OEMs recently announced partnerships and/or investments in ridesharing brands, as evident with GM’s and Toyota’s intentions to partner with and invest in Lyft and Uber, respectively. Some OEMs, like Ford and Tesla, announced plans to set up their own driverless taxi fleets, both to compete with ridesharing services like Uber and allow driverless car owners to engage in community sharing.

“Unsurprising, Didi Chuxing and Uber are also exploring driverless taxis,” concludes Bonte. “Driverless technology will allow the car sharing paradigm to maintain growth levels beyond 2025. Other initiatives to support this economy include driverless shuttle and taxi trials by Delphi, Navya, and nuTonomy in Singapore and Japan’s plan to deploy driverless robot taxis during the 2020 Tokyo Olympics.”  

These findings are from ABI Research’s ITS Market Data. This report is part of the company’s Automotive, Smart Mobility & Transportation and Enterprise IT & OT Convergence sectors, which include research, data, and analyst insights.