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Quantifying the Requirements to Scale a Carpooling Business

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Abstract: Carpooling is now seen as last big opportunity to grow a shared mobility as a service (MaaS) business ahead of the arrival of autonomous vehicles (AVs). We present the case that Waze’s altruistic vision of carpooling is insufficient to scale the business. Our transactional vision of the business, requiring market pay rates to drivers, creates little incentive for people to choose carpooling over solo commuting. We think that it will take a minimum of $4,000 in cost saving to motive a significant number of people to go carless. This implies that fares will have be reduced by an additional $1,583 a year to reach that level of cost savings. The way to recoup this is by negotiating referral credits (dollar or accounting) with related units offering last-mile ride-sharing, delivery, and weekend car rentals.

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