The Future of Local Public Transit

Yesterday, Innisfil, Ontario and Uber launched Canada’s first ridesharing-transit partnership. Certain destinations, such as regional transit stations (GO) and municipal service locations (Innisfil Recreation Complex, Town Hall etc.), will have set rates of $3 to $5. Riders can also pick any destination of their choice, and will save $5 off their fare.

Although this is Canada’s first ridesharing-transit partnership, municipalities in the U.S, Europe, and Asia have made similar agreements with Lyft, BlaBlaCar, DiDi, and the like.

These partnerships, along with advances in electric autonomous vehicle technology, signal the beginning of the end for local bus and streetcar routes.

A consumer’s primary motivation for choosing local public transit over vehicle ownership, taxi, or ridesharing, is cost. As a result, they trade their time and comfort in order to save money. The subsidies offered through ridesharing-transit partnerships drastically reduce the sacrifices of time and comfort required to realize those savings.

From the government’s perspective, these partnerships save millions of tax dollars in operating costs and capital costs for vehicles and infrastructure.

Ridesharing-transit partnerships are good now, but they are about to get a lot better in the coming years. In his Master Plan, Part Deux, Tesla CEO, Elon Musk writes about the future of ridesharing:

When true self-driving is approved by regulators, it will mean that you will be able to summon your Tesla from pretty much anywhere. Once it picks you up, you will be able to sleep, read or do anything else enroute to your destination.

You will also be able to add your car to the Tesla shared fleet just by tapping a button on the Tesla phone app and have it generate income for you while you’re at work or on vacation, significantly offsetting and at times potentially exceeding the monthly loan or lease cost. This dramatically lowers the true cost of ownership to the point where almost anyone could own a Tesla. Since most cars are only in use by their owner for 5% to 10% of the day, the fundamental economic utility of a true self-driving car is likely to be several times that of a car which is not.

In cities where demand exceeds the supply of customer-owned cars, Tesla will operate its own fleet, ensuring you can always hail a ride from us no matter where you are.

Elon outlines two ways that vehicles will be made available for ridesharing once true autonomy is approved that are not possible or economical now.

First, owners will be able to make their vehicles available for ridesharing when they are not using them. For example, you can schedule your vehicle to be available to others, of your choosing, between the hours of 9am and 5pm daily. You can also choose how far they are able to travel and how much of your vehicle’s range they are able to deplete. This capability will drastically increase the number of vehicles available for ridesharing because owners will no longer need to have the time to personally drive them.

Second, manufacturers will be able to operate their own fleets of ridesharing vehicles in order to swallow up any excess demand as a result of not having to pay drivers. This will allow manufacturers to make use of their overproduction volumes and quickly react to increases in ownership demand by selling ridesharing vehicles at previously owned prices.

For the foreseeable future, subways, trains and regional buses remain a vital part of our public transit systems.  But, with the number of ridesharing vehicles rising, it makes more sense every day for municipalities to subsidize ridesharing instead of increasing investment in local bus and streetcar routes.