Uber and Lyft fares could drop by as much as 80 percent by 2030, according to estimates from global bank UBS.
The firm “ran a massive simulation model to estimate the future of ride-hailing in New York City, and the impact robo-taxis could have on the space," according to Business Insider. The study predicted that consumers and riders could see a $2 trillion robo-taxi market by 2030.
"The average fare paid by passengers could fall by more than 80% and become cheaper than a metro ticket," UBS analysts wrote in a report for clients. "In such a scenario, the robo-taxi fleet would still generate a healthy profitability margin of more than 30%."
Impact on public transportation industry
Should the estimates presented in the report prove to be accurate, ride-hailing giants Uber and Lyft would find themselves in a significantly better position than they are now.
Uber recently said it may never make a profit, as its ability to make money is currently hampered by factors that include cutting prices for passengers, spending to recruit drivers, and investing in businesses such as food delivery and scooters.
"We expect our operating expenses to increase significantly in the foreseeable future, and we may not achieve profitability," Uber said in its IPO prospectus.
Conversely, UBS’ projections suggest a difficult road ahead for public transportation systems.
“Multiple studies have already shown that ride-hailing services are quickly siphoning off users from trains and buses,” Business Insider noted.
Growing robi-taxi market
UBS said its simulation showed that the “utilization rate,” or the percentage of time a car spends carrying a fare-paying passenger, of the robo-taxi fleet is poised to reach “50% over a 24-hour shift,” which is “twice as high as Uber/Lyft's utilization rates today, and 10 times higher than a private car.”
That growth will kick off once the “inflection point” is reached, UBS explained in its report.
"Once the inflection point is reached, we believe the growth rate for robo-taxi adoption will be steep," the analysts said. "We remain confident that the robo-taxi business model works both financially and technologically, although we delay our forecast for robo-taxi (L5/L4) penetration by 1-2 years, mostly to reflect higher efficiency of the fleet as shown in our simulation (i.e. fewer cars are required to cover demand)."