What is more excessive: regularly taking taxis or possessing your own car?

In Belgium owning a car is still something to aspire. A symbol of freedom to go where you want, whenever you want.
The generation of the millennials seems however to make a shift. Often living in the (large) cities, they prefer to make use of the different available public and sharing mobility options (public transport, ride/car sharing, bike/step/scooter sharing…​). A whole mobility eco-system is rising around this evolution:

• Route planners taking into account these alternative ways of transportation: e.g. Skipr or Jeasy
• (e)Bike, (e)Step and Scooter sharing services:
  • (e)Bike: Jump, Villo!, Billy Bike, Blue-bike, Fietspunt, Velo, Cloudbike, Spinlister
  • (e)Scooter: Scooty, Felyx
  • (e)Step: Dott, Lime, Troty, Bird, Circ, Poppy
• Car rental: Sixt, Rentalcars.com, AutoEurope, Avis, Rent A Car…​
• Car sharing: Cambio, Partago, Zipcar, Poppy, stapp.in, CozyCar…​
• Car pooling: Taxistop, Eventpool, Karzoo, BlaBlaCar, Toogethr
• …​

While these are good alternatives for short distances and for people living in the large cities, they are not very practical for people living outside the large cities. The same people now using these alternative means of transport are often still trading in their city apartment for a house in the suburbs or countryside, once they get children. It is important to avoid that these people will be reconverted to traditional patterns of mobility at that moment.

One possible alternative to owning a car could be taxi. Taking a taxi is still considered in Belgium as luxury and excessive. Indeed, taxis are (considered) expensive in Belgium, but are they really that expensive? People have a tendency to consider a product or service for which they pay a fixed, direct amount as more expensive, compared to a product or service, with a lot of indirect costs or with recurring flows of smaller amounts (hence the evolution of buying everything via a subscription model).
I was wondering therefore as of which point it would be more interesting to always drive around in a taxi. Below I made a quick calculation (for Belgium):

What is the price of a taxi?

Prices differ between different taxi companies and in different cities, but on average you could say a customer pays around 2.50 EUR initial fee and 2.20 EUR per kilometer.

What is the price of owning a car?

Typically, a calculation of 0.33 EUR per kilometer is used.
More in detail you can consider, below simulation:

• Acquisition of a car : 17 500 euro.
• Price of the license plate: 30 EUR
• Car entry tax: 150 EUR
• Traffic tax: 250 EUR / year
• Car insurance: 400 EUR / year (note that this is not for an omnium insurance and for young people, this can be considerably more)
• Gas : 1.5 EUR / liter with a typical consumption of 5 liter / 100 km, gives 0.075 EUR / km
• Small maintenance car: 200 EUR
• Major maintenance car: 600 EUR
• Tires: 500 EUR for replacement of all tires (to be done every 45.0000 km)
• Vehicle inspection: 40 EUR

If we consider a write-off on 8 years this results in following figures:

• Acquisition of a car : 182 EUR / month
• Taxes and license plate: 23 EUR / month
• Insurance: 33 EUR / month
• Maintenance: 38 EUR / month
• Vehicle inspection: 1 EUR / month

which gives a fixed cost of 277 EUR / month without fuel.

Note that this excludes the residual value of the car (after 8 years) and following (potential) costs:

• Interest payments for car loan
• Parking payments
• Winter tires
• Car wash
• Repair costs following accident(s)
• Traffic fines

Now that we have calculated the costs of these 2 means of transportation, let’s do some simulations:

Scenario 1: Person does 1 trip a day to somewhere, on average about 10 km in distance (so 20 km in total back and forth):

• Car:
  • Gas: 30 days / month * 20 km / day * 0.075 EUR / km = 45 EUR gas / month
  • Fixed cost: 277 EUR / month
  • Total: 322 EUR / month
• Taxi:
  • Initial fee: 30 days / month * 2 trips / day (back and forth) * 2,50 EUR = 150 EUR / month
  • Km fee: 30 days / month * 20 km / day * 2,20 EUR / km = 1.320 EUR / month
  • Total: 1.470 EUR / month

Clearly in this scenario, a taxi is not an option.

Scenario 2: Person does 2 trips a week to somewhere, on average about 10 km in distance (so 20 km in total back and forth):

• Car:
  • Gas: 4 weeks / month * 40 km / week * 0.075 EUR / km = 12 EUR gas / month
  • Fixed cost: 277 EUR / month
  • Total: 289 EUR / month
• Taxi:
  • Initial fee: 4 weeks / month * 2 trips / week (back and forth) * 2,50 EUR = 40 EUR / month
  • Km fee: 4 weeks / month * 40 km / week * 2,20 EUR / km = 352 EUR / month
  • Total: 392 EUR / month

In this scenario, the taxi is still more expensive, but difference is not that big anymore, especially when considering all costs which were excluded (see above) and the advantages of a taxi, i.e.

• No parking issues
• Possibility to consume alcohol
• Possibility to relax or do other things during the drive around
• Transform CapEx to OpEx, i.e. avoid fixed costs, but instead pay only for actual usage

The above scenario shows it can be interesting for people consuming their car very little to use always a taxi instead. Especially for elderly people, for which driving can give a lot of stress and for which parking far from their destination is problematic, this can be a valuable alternative. At the same time, the scenario shows that the taxi is depassing already the cost of a car only with a few rides a month.

In order to make this really a valuable alternative, the sector should modernize and explore new options, like:

• Embrace more initiatives like Uber, Lyft and Bolt (European challenger of Uber), but adapted to the Belgian market, i.e. working with professional taxi drivers. Such platforms make the whole taxi process much more user friendly, which can result in more demand (and thus less taxis not driving around with customers).
  A platform like Uber can give a lot of advantages to customer and taxi driver:
  • Easier calling a taxi (fully online, automatic selection of closest taxi, based on mobile location and estimation of time for taxi to arrive)
  • Get notified when taxi is at your location and get immediately info about driver
  • Automatic communication of destination to driver
  • Automatic estimation of price for the ride and time to destination
  • Automatic online payment
  • Possibility to review and score driver, allowing immediate feedback and improving quality
  • Platform can predict places where people will be calling for taxis, allowing taxi drivers to drive there (allowing to increase revenues for taxi driver and reduce waiting times for customers)
• Subsidize taxis, with taxi vouchers. Many cities in Belgium already offer taxi vouchers to inhabitants with a mobility restriction. The system has however a lot of restrictions, not very known and still paper-based (making the user experience not very fluent).
• Allow sharing a taxi (with strangers) via a platform, allowing to divide the price
• Mini vans making fixed tours, but also visible and reservable via platform (at lower rates), providing an easy alternative for Public transport

Platforms like taxi.eu and eCab try to setup such an alternative to Uber, but with professional taxi companies. It will be interesting to see if such platforms can modernize the taxi sector and lead to better customer service and lower prices. If so, the taxi can be a real alternative to owning your own car (if you use your car very little).

But all this is just an intermediate step towards the self-driving cars. This will completely revolutionize our mobility, as cars rented as a service will be available to anyone (also those living at the countryside), at relatively low costs and providing all above-mentioned advantages of a taxi.