Waze: Does Carpool hold the key to decreasing congestion?

It is no secret that private car ownership is dying - it is a painful, but a rather slow death. Even if the booming popularity of last-mile solutions had not made it clear that people are turning their backs on cars, the launching of subscription-based ownership structures by most major automotive manufacturers should have you convinced. Despite this shift in ownership trends, though, private cars are still king. As the latest data found in the American Community Survey shows, more than 76 percent of Americans commute to work alone every day - carpools of at least two people account for just 9 percent of daily commutes. As Audi’s 25th Hour Project recently showed, minor changes in the average car occupancy can have a huge impact on increasing or decreasing congestion in urban centres. Cognisant of that and obviously aware of a gap in the ride-sharing market, Google’s Waze introduced its ride-sharing functionality to the entirety of the United States. So, does Waze Carpool hold the key to decongestion? 

Last-mile solutions can only take you so far (literally!)

Source:  Bloomberg

Source: Bloomberg

Despite the increased attention dockless solutions have received lately, their application is quite limited: as Bloomberg showed, using data from Bird and Uber’s Jump, the average distance covered by Jump’s pedal-assisted bicycles and Bird’s electric scooters was 2.6 and 1.5 miles, respectively.

Although these dockless miracles are bound to reduce congestion and pollution in city centres, they are also limited by their very own nature. In order to be practical, they have to achieve a certain density/square mile; for this to be economically feasible for providers, they need to operate in relatively small areas. Furthermore, heavy weather conditions will always give cars the upper hand. Scooters have not yet managed to beat heavy winters, for example, and it is quite unlikely that they will manage to convince anyone but the most hardcore scooter-rider to ride them to work amid heavy rainfall or snowfall. Lime, which recently became the first scooter-sharing company to launch in Canada will soon remove its scooters from Waterloo and reintroduce them after winter has passed. Pedal-assist bicycles are faster, generally sturdier, and thus more likely to be ridden in worse weather and/or for longer distances. Yet, they suffer from similar problems when it comes to riding in bad weather

The limitations of these last-mile solutions can explain why people living outside the city centre, or people living in cities plagued by heavy winters and/or summers, will be more hesitant to give up their cars - at least for the time being. Hence, it can also help explain why Waze may actually have an equally good, or even better shot at removing cars from such cities - particularly when paired with access to public transit and last-mile solutions.

Uber & Lyft are not the hero we need, yet 

Uber and Lyft often suggest that they are capable of “removing cars from the streets”. Lyft even calculated that some 250,000 of its users have sold their cars due to the availability of ride-sharing services. Despite the drop in car ownership, ride-hailing has not done much for the decongestion of the cities: a recent report from the San Francisco County Transportation Authority found that half of the increase in congestion between 2010-2016 in San Francisco is attributable to the rise of ride-hailing. Waze’s solution has an ace up its sleeve: the drivers are not professionals, and thus, will not be aimlessly driving around waiting for another request. Instead, Waze Carpool allows passengers to jump on cars which are anyway driving to a destination close to theirs in proper hitchhiker fashion, thus guaranteeing the road network is not unnecessarily burdened.

Click to enlarge

Source: Investopedia

Further to the potential burdening of the city streets, swapping driving for Uber/Lyft ride-hailing is not even financially wise (or at least, not yet). Lyft has become the leading figure of the fight against private car ownership. After experimenting with various monthly subscription services (varying the amount of included rides), it recently launched a monthly package at $299 - with 30 rides worth up to $15 included, it aspires to encourage people to sell their cars and choose to ride Lyft instead. Assuming a 15$ ride can buy you a 5 mile trip on average, Lyft’s offer could buy you 150 miles / month, or approximately 2,000 miles / year for $3600. As data compiled by the American Automobile Association reveals, the per mile cost of owning a small sedan is approximately 55 cents / mile for people driving under 10,000 miles / year. Which means, for the price of Lyft’s service, you can drive 6,500 miles a year - almost 3-4 times farther. Even factoring in the convenience of being driven instead of doing the driving, the price difference remains substantial.

It becomes obvious that owning a car and doing the driving is still cheaper than opting for a Lyft - even at the reduced rate the subscription package can afford you. Which is why replacing one’s car still makes little sense - even less so if you drive more than 10,000 miles a year. Given that private car ownership is still far from being over, the solution provided by Waze may provide a smarter way to make driving even cheaper and decongest cities. As Business Insider reported, Waze drivers will be reimbursed (by passengers) at a rate of 54 cents / mile driven, added to a base charge of 2$. Uber typically charges 97 cents / mile - and this does not include wait time and base charge. 

Seamlessly charged, yet in charge.  

Waze is built differently: it prides itself on being the “cooler sibling of Google Maps” - it allows people to report live traffic conditions or share their ETA with their friends. The exchange of money, particularly between friends, is an awkward process for most people, and thus, incompatible with the spirit of Waze

In line with its friendly roots, Waze Carpool allows both drivers and riders to forget about the transactional aspect of their transaction. The cost of the ride is set according to the route and the number of riders - there is no surge pricing that the riders need to worry about, the drivers have no incentive to time their drives to earn more, and, importantly, payments happen automatically. The driver is not required to initiate a Venmo/PayPal-like request for money and the passenger is not tasked with calculating and wiring a fair amount to the driver. 

Click to enlarge

Source: Waze.com

Although the overall process sounds similar to Uber Pool / Lyft Line in some respects, Waze has made sure to tackle one of the most unappealing aspects of the ride-hailing giants business. The randomness in the selection of drivers. As news of indecent driver behaviours keep breaking out, passengers are presumably less confident having a complete stranger drive them anywhere. Waze Carpool has carved its own Bumble-esque path: passengers can filter their choices based on specific characteristics, such as gender (option for drivers of the same gender available) and place of work (one can choose to only see drivers working for the same company as them). Further to these options, passengers have access to a range of information about their potential driver: their star rating, number of rides, as well as the number of mutual friends are clearly shown alongside the driver’s photo. Google has made it abundantly clear that with Waze, the user remains in control. Drivers always retain the right to turn down a carpooling request - thus ensuring both parties are happy with their “carpool date”.  

Rethinking the revenue model, Adwords style?

Waze does not take a cut of the “fee” riders pay: the entire amount goes to the driver. This is expected to change as the driver density increases and the service becomes more prevalent, said Noam Bardin, CEO of Waze. Regardless, the non-commercial, friendly nature of Waze ensures that drivers will almost surely be incentivised to find passengers, even if the level of subsidisation of their gas shrinks when Waze starts taking a cut of the payment. 

Even more interesting is the fact that the removal of salaried, professional drivers from the mix, gives Waze the opportunity to reconsider how the service becomes profitable. As Josh Fried, head of Waze Carpool told the Fast Company, “there are really nice ad opportunities for riders - you could show a rider a two-minute movie preview, like a trailer, paid for by a movie theatre that subsidises that ride.” Further to this, one can easily come up with further partnership ideas which could help Waze drive widespread adoption of its carpool service. Cheaper rides subsidised by advertised companies is just one - drivers could also collect points through carpooling which could be used for discounts at local service points that partner with Waze. Riders could use their “carpooled miles” to unlock discounts at local stores

Maybe, Waze is gonna be the one that saves me?

Waze makes a great case: ride-hailing is still significantly more expensive than driving one’s own car. Waze is not. It takes the tried-and-tested concept of hitchhiking into the 21st century, without burdening drivers and passengers with the need to ask for and send payments. It even tackles the fundamental concern some riders have with regard to ride-hailing, namely the inability to choose one’s driver. Add to that the potential that can be unlocked through partnerships with third-party providers/vendors, and Waze Carpool suddenly becomes a viable, attractive, and importantly, different enough solution to the problem of commuting.

Waze Carpool is now available in the United States, Brazil, and Israel. The only box that remains to be ticked is that of popularity: if the service manages to convince enough many people to join, then the Carpool platform can become a reliable substitute for Uber and Lyft. Will Google achieve the requisite adoption levels? We look forward to finding out.


Photo Credit: Waze