The global ride sharing market is projected to grow at a CAGR of 16.6% during the forecast period, from an estimated USD 85.8 billion in 2021 to USD 185.1 billion by 2026. Increase in urbanization, internet and smartphone penetration and increase in cost of vehicle ownership are the major factors driving the growth of the ride sharing market.
The ownership of a vehicle is cumulative of multiple factors such as finance, fuel, maintenance, registration/taxes, and maintenance & repair, along with depreciation. With each year, the cost of vehicle ownership increases. Though, according to American Automobile Association (AAA), depreciation contributes to ~43% of the ownership cost, the other costs, such as maintenance cost and fuel cost, contribute ~25% together. Fuel prices and maintenance costs have increased multifold in the past few years, and the same trend is estimated to continue without any decline. As cities are getting increasingly cramped with people and cars, owning an automobile has become more of a liability than an asset. According to AAA, the average cost to own and operate a new car increased by USD 279 in 2020, as compared with 2019, to reach USD 9,561.
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As the millennial generation has little-to-no interest in owning a car, the rate of car ownership among people aged between 18 and 35 has declined over the years. Other reasons for the decline in car ownership are poor connectivity by public transportation in key cities and the increasing trend of online shopping, among others.
Though the trend of car ownership has grown during the pandemic, it is expected to return to the pre-pandemic trend after 2021. Hence, ride sharing service providers can capitalize on these demographics as the new tech-savvy generation constitutes one of the largest user bases of these services.
The electric vehicle sharing market is projected to grow at the highest CAGR during the forecast period. This growth is attributed to the existing lower penetration of such vehicles in the ride-sharing fleets, favorable government policies, improving charging infrastructure, and growing awareness about CO2 emissions. In the initial stage, ride sharing with electric vehicles is estimated to be costly; however, in the future, as the awareness among people to use electric vehicles is growing, the market for ride sharing services by electric vehicles would ultimately enhance. The service providers can leverage this opportunity by providing a suitable sustainability model of ride sharing with electric vehicles, which could attract drivers and people to opt for the same. For instance, Uber has started paying extra dollars per trip to drivers who want to use electric cars.
Moreover, various developments in recent year as, in 2020, Uber announced a new partnership with Lithium Urban Technologies, that is among India’s largest electric vehicle fleet operators. This partnership will deploy over 1,000 electric vehicles for Uber India’s Rentals and Premier services in the upcoming years. Additionally, Uber launched it’s Uber Green’ service in London. With this, Uber users in central London can now request a zero-emission vehicle instead of wholly or partly fossil-fueled cars. In January 2021, Uber and in January 2021, expanded the Uber Green service in the USA after launching in 15 US cities in September. Such developments will bring more people toward using ride sharing with electric vehicles.
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Navigation is the most important data service for the smooth operating of ride sharing companies. Thus, the navigation segment is estimated to account for the largest market share, by value.
The market in the Asia Pacific region is projected to be the largest. Ride sharing can help address various issues such as traffic congestion, air pollution, and greenhouse gas emissions, which have risen due to the rise in urban population. The ride-sharing services in Asia Pacific are growing rapidly because of the demand in countries such as China, India, and Japan. These countries have started recognizing ride sharing as a solution to curb issues such as traffic congestion, air pollution, and greenhouse gas emissions. Also, the region is home to some of the dominant players in this market, such as Didi, Go-Jek, Grab, and Ola.
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