Car ownership
I’ve briefly written about this topic in the past, but recent personal events have gotten me thinking even more deeply about the behavioral economics of personal vehicle ownership. My day job also happens to be in the transportation sector, so there’s a lot on my mind about this lately. It’s no secret that I’ve always been against car ownership. I ended up selling my old car back in 2015 when I moved from a car-dependent suburb in Pennsylvania to the transit-friendly city of Boston. Since then, I lived car-free for six years and until I moved to another suburb near Portland OR, in 2021. Here, owning a car was a necessity. All the streets were designed around needing a vehicle and you couldn’t get basic errands done without a car. So I bought a car. And most recently, I moved to the transit-friendly city of San Francisco this year and bought my car with me. This time though, I didn’t sell the car. Why? What made me want to keep it despite the insane costs of car ownership in the US? What made me justify the cost despite being able to get anywhere I wanted to within the city on some combination of public transportation or car share? How do I mentally resolve working at a place whose end-goal is to eliminate vehicle ownership and yet owning a car myself?
First, let’s look at the costs. Parking at my current apartment costs $300 per month (yikes, that’s a game console every month). The car’s financed payments are a casual $600 per month. The insurance cost breaks down to $120 per month. It’s an electric car, so charging it costs roughly $50 per month (based on usage). And then there’s any potential maintenance, which we can estimate at an average of $50 per month. All of this combined is a ridiculous $1,120 per month just to own the car in San Francisco (bigger yikes, that’s an iPhone every month). That’s how much I was paying in rent in Boston just a couple of years ago. My entire former rent is now going into car ownership, which I should frankly be baffled by but I doesn’t have me too concerned. Financially, my income is significantly higher than it was in Boston, which does help alleviate the cost of living in an expensive city like San Francisco. Secondly, my partner is also working and chiming in for half the rent, so at least our insane $4k+ per month two-bedroom (welcome to San Francisco) is being split two ways.
As a side note, I have to call out how our brains are easily tricked into the premise of paying more if something is marketed as free. When we were looking for apartments in San Francisco, we saw apartments that were $4,000 per month but parking was an additional $300 per month. This caused me to do a lot of mental justification for whether it’d be worth paying for the parking cost or not, but when we saw other apartments that were $4,300 per month and were marketed as “Free complimentary parking”, my brain wanted to snag up the place quickly because of how good a deal I thought it was. Pretty insane how easily we’re lured into paying more just because the cost is included in the total cost and then has a “Free” label slapped onto it. Splitting parking into its own expense causes a strange kind of compartmentalization where you end up internally debating whether it’s worth that amount. I guess the same can be said if your rent was broken down into itemized charges for every bedroom and bathroom. I bet it would lead a lot of people to say things like “Hmm, we’re not really using the second bedroom for much, is it really worth paying this much for it?”, whereas it’s not really a concern if it’s just included in the total rent. You just try to use the space as best as you can without thinking about the price.
So the monthly cost of owning a car in San Francisco is clearly too high. Public transportation in the city is decent, and there are ample options available to get around through a combination of MUNI, BART, and several electric bikeshare and scooter share services. So I started making plans to get rid of the car. Enter a new complication. We now had a puppy and my partner bought up the valid concern that we’d likely need some way of transporting him to the vet in the event that he had an emergency. Sure, we need a solution for this, but I didn’t think that paying over a thousand dollars per month was the right one. I looked up several options for car share and there seemed to be a good amount of options between Zipcar, Turo, Gig, etc. However, most don’t allow pets and the reviews complained about the risk of getting a car that constantly smelled like weed or cigarette smoke, which isn’t exactly the most appealing interior to step into when you need to rush to the vet. Lyft or Uber was another option, but it’s ultimately up to the driver to be okay with having a pet in the vehicle, and there’s a good chance they’ll cancel on you if they don’t want pets in their vehicle. Our puppy is thirty pounds, so he won’t fit in a small carrier but would fit in a large carrier. He’s also a bit of an anxious dog, so we also weren’t entirely sure if he’d be comfortable in a claustrophobic carrier. There really isn’t a solid alternative to transporting pets in emergency situations when compared to owning your own vehicle.
My next move here was to see if I could still sell the car while still owning a cheaper vehicle. We’d be paying the same amount in parking, but maybe we could cut the monthly car payments in half? My current car is a brand new Tesla Model 3, and I really like it. Thanks to the state of the world we’re in right now, its value has appreciated and are currently selling for a higher price than for what I bought it (which is insane). Ordering a new Model 3 currently puts you in a waitlist that’s at least six months long. So sure, I could get rid of it, but here’s an admission: I really like this car. It is hands down the best car I’ve driven and I ordered one immediately after test-driving it. It offloads all of the annoying parts of driving a car to the vehicle and lets the driver focus on the road. It’s dead silent and has instant torque when hitting the accelerator. Its minimal interiors and top-tier safety features make it ideal for traveling places with my partner and puppy. The fact that it’s fully electric allows for big savings on gas (which is currently nearing $6 per gallon in California), and I love that it’s continually getting better with software updates. I still have problems with Elon Musk and his views on the world, but this car is excellent.
So I was leaning towards wanting to keep it, and my partner then suggested that we could use it for weekend trips. True, but we could also use rental cars for weekend trips, which comes out to be cheaper in the long run. This is another fascinating experiment in how our brains think about money (or at least mine). Let’s say we planned to do mini weekend day-trips every weekend. The cost of renting a car on a weekend would total out to maybe ~$200 for two days (in the Bay Area, based on my past rental history — renting through Lyft eliminates the cost of physically getting to and from the rental lot since those rides are free). If we were to travel every single weekend in the year, it would come out to roughly $200 x 52 weeks = $10,400 per year. This is still cheaper than the current $1,120 x 12 months = $13,440 per year that I’m paying to have my car. It’s very unlikely that we’ll actually travel every single weekend, but just using the maximum value here for comparison’s sake. Logically, it makes sense to get rid of the car and go the rental route, right?
Ultimately, using the rental requires planning. It takes away the spontaneity involved in just deciding to go to the beach on a Saturday morning and requires some forethought a few days in advance. It also causes some delay before leaving and upon returning to go to the rental lot, pick up the car, drive back home to load up our puppy and our supplies, and then leave. What that extra couple thousand dollars is doing for us by owning the car is giving us the option to leave on a whim wherever (even if we rarely ever actually do that) and adding some quality of life conveniences to the actual logistics of getting in the vehicle and leaving. I still don’t think it’s worth thousands of extra dollars, but this is how our brains justify costs. We know that humans make emotional decisions and then justify them rationally, so here’s my brain doing just that.
Moreover, the cost-per-trip is another interesting mental roadblock to work around. Let’s say I decide to get a rental to go to Big Sur on the weekend. Upon booking the rental, my brain is now thinking “Is it really worth spending $200 on this just to go stare at some water?”, causing me to re-consider the entire trip and calculate whether or not the unit economics work out. But if I’ve already locked in the cost of the vehicle through the monthly car ownership payments, then my brain thinks of the trip as “free” since we already have a car. Again, compartmentalizing the car ownership costs in a different place mentally takes it away from being accounted for as the cost of the trip (even though in reality, it is). Because of this strange effect, I’ve found myself more willing to drive out on the weekends to explore the surrounding sights more often just because I happen to own a car. It almost feels like I need to justify the cost of car ownership and derive some value out of it rather than let it sit in a parking lot where all it does is cost me money, so I find myself more driven (excuse the pun) to take it out and see places. Another example of the emotional decision making later justified by rational logic through actions.
Netflix, Spotify, or any subscription service is a good analogy here. If someone recommended you watch Squid Game and you already are a Netflix subscriber, sure, you’d give it a shot since you already have Netflix. But if Squid Game was available for a one-time weekend “rental” of $4.99, you’d probably be debating whether it’s worth it or not. You don’t watch the entire Netflix catalog, but you like the convenience of having it and the option to watch whatever you want, whenever you want. You don’t need the entire Spotify catalog, but you like being able to access any song in the world for a flat monthly rate. It’s ultimately convenience and choice we’re paying for, not the actual service itself. Even if the economics worked out to be cheaper by buying individual shows or songs (based on habits and usage), there’d a good chance you’d convince yourself that it’s worth it to have access to everything on the off-chance that you want more options sometime. Wild how subscription services totally re-wire our brains to think differently about costs.
At the end of the day, saving that $13,440 per year by giving up the car does not make a massive dent in our financial situation (which is a statement I’m very fortunate to be able to say, given how many people in the world would be immediately bankrupted if they were in debt for that much) and improves our quality-of-life while providing convenient options to get around in on a whim, which is really what we’re paying for. It transforms the way I think about it in looking at it in terms of paying for the ability to get in and go wherever, whenever (as opposed to looking at it as if we were paying for the car). Furthermore, it shows the desperate need for a viable alternative to car ownership in the US. Sure, car share services exist, but how reliable will they be if you need one within the hour to drive your dog to the emergency vet? Are you willing to risk getting a car where the previous driver left it in a less-than-presentable state? Sure, transit options exist, but public transit in the US is primarily designed to move people from the suburbs to the downtown and back. If you need to get from one suburb to another, it can take upwards of an hour because the train would have to go through downtown and into the other suburb, whereas it might take a fourth of that time to drive there yourself. Sure, you could take a rideshare service, but you’re risking whether or not the driver will accept pets and are putting up with potential surge pricing and constantly rising costs. Owning a car takes all these problems and conveniently solves them as long as you’re willing to throw a lot of money at it. It’s not efficient by any means and we’re definitely not maximizing the value of our money through owning the car, but it’s currently the best solution to every potential situation we might find ourselves in.
At the same time, everyone buying a personal vehicle for the same reasons that I did is not a sustainable solution at all. The US seriously needs to invest in alternatives and it continually refuses to do so. Research has shown time and time again that the best way to ease traffic congestion and reduce travel times is to provide people with alternative means of transportation aside from driving a car, not expand freeways to include more lanes. And yet, we keep expanding freeways to include more lanes. Why? Well, taxpayers who drive and commute in their car don’t want to see their hard-earned money put towards rail or transit. They think the Department of Transportation should use the funds to improve the mode of transit that those taxpayers use the most — the roads. And so we expand freeways instead of funding better, more accessible alternatives to cars. The US is going to stay stuck in this mode of thinking and operating for decades if we don’t put a massive amount of money into developing high speed rail and greatly upgrade city-wide public transit.
Not Just Bikes is one of my favorite YouTube channels that is dedicated to this topic. It highlights the hellish landscape of car-dependent suburbia and encourages people to educate themselves about how much better the state of public transportation could be if the city was properly designed to handle different modes of transit. The creator frequently cites Amsterdam as an inspiration to other cities, since the design of the city’s bike lanes has proven tremendously successful in encouraging the majority of its residents to bike instead of drive. Moreover, car share services in the city are excellent, allowing for quick booking and pickups for the occasions when you do need to drive outside of the city for a trip. Designing cities around cars is going to do just that — encourage people to buy cars to get around since they believe it’s the most convenient way to do so. Providing other options and expanding the infrastructure to suit those options is a crucial step in the path towards eliminating vehicle ownership.
Lyft, my current place of employment, has had a painful realization to the same effect. The once ambitious and lofty goal of designing cities around people and not cars won’t go anywhere without proper public policy and regulations for the alternative modes of transportation. In the meantime, Lyft has to cater to personal vehicle owners and offer services to them in order to build its brand as the go-to leader in transportation solutions. Rolling out soon, you’ll see options to get your personal vehicle serviced in the Lyft app alongside options for roadside assistance, compare insurance quotes, and even a marketplace to buy and sell cars down the line. So yeah, the company that had a grand vision to fully eliminate car ownership is now embracing the very thing it stood up against because that’s how widespread and ingrained this issue is in the US. The long-term goal is to still eliminate car ownership, but it’s going to be a while till we get there.
In the meantime, I’m trying to make the most of owning a car in California. Most of this state is inaccessible without a vehicle, and it has some of the most beautiful and wondrous landscapes in all of North America. It feels like a waste, then, to not take advantage of the national and state parks in a car and try my best to see them all. At the very least, it’s a more worthwhile endeavor than simply complaining about the high tax rate in the state. I’d at least get to see what it’s being put towards and appreciate nature a little more. On the sidelines though, I’ll be voting for every ballot measure and fund initiatives towards solutions that try to make a dent in the behemoth that is car infrastructure in the United States, and I’m really hoping big swings happen soon given the climate emergency and off-the-charts inflation we currently find ourselves in.