Introduction
More than any year before it, the past few years have revealed many changes in the ridesharing economy. An important trend has been the way people use and interact with social media across different geographies. In fact, there has been a shift in the ridesharing landscape across the world.
The ridesharing market continues to grow and proves to be an ever-evolving industry. Despite: a $500 million loss from a ridesharing company in 2015, the ridesharing company was still valued at $62.5 billion in 2016, another ridesharing company total revenues for 2016 were $700 million.
Both companies continue to roll out new ways for their drivers to earn extra money. It appears that the majority of the rideshare business is still very much alive and well. But that fact alone begs the question: “is it worth it?”
The Growth Of The Ridesharing Industry
The ridesharing industry has exploded in growth since its inception in the early 2010s. With several services competing for users. This has resulted in thousands of new jobs for both drivers and employees.
Having recently reached a valuation of over USD 120 billion, ridesharing is now one of the most valuable industry in the world.
However, despite growing revenues and user numbers, it has been increasingly difficult for ridesharing companies to turn a profit. While initially scaling their businesses, ridesharing companies lost billions of dollars subsidizing rides for customers to attract them away from traditional taxis and public transportation.
Even with subsidies gone, ridesharing companies are still burning through hundreds of millions of dollars annually as they scale their businesses globally.
Deloitte Global predicts that online ridesharing, currently worth about $36 billion, will be worth around $285 billion within a decade. For comparison, the global market for public transportation is presently valued at over $6 trillion.
The ridesharing market’s growth is expected to continue because of several macroeconomic factors: urbanization, millennials’ preference for experiences over objects and the “gig economy” in which people trade the stability of full-time employment for more flexible working hours.
How much money do rideshare drivers make around the world?
With the introduction of ridesharing services in China, ridesharing is gaining popularity worldwide. In the US, rideshare drivers earn an average of $13.25 per hour. But just how much money do rideshare drivers make around the world?
To answer this question, we analyzed rideshare trends in five different countries: China, India, Malaysia, the Philippines and South Africa.
We looked at the minimum and maximum amount of money someone can make from giving rideshares in each country, as well as how many hours per week someone needs to work to afford a 2-bedroom apartment.
We found that South Africa has the highest rate of minimum earnings for drivers, earning $1.67 per minute or $100 per hour. This is about 7x higher than the US and Canada’s minimum payments of $0.26 per minute ($15 per hour).
A ridesharing company released a report that looked into the economics of ridesharing globally. The report found that, on average, rideshare drivers make USD$16.90 per hour in the US after expenses, and when taking into account the time spent waiting for a ride request and picking up passengers.
The report also included data from other countries like Brazil, India, South Africa, and Australia. For rideshare drivers in Australia, the average earnings are AUD$19.04 per hour before taxes and expenses (~$14/hour). In comparison, taxi drivers make an average of AUD$20.10 per hour before taxes and costs (~$15/hour).
Rideshare drivers in the US earn slightly less than taxi drivers who, on average, earn around USD$18.65 per hour before taxes and expenses. However, rideshare drivers put fewer hours in with an average of 26 hours worked per week (US) than taxi drivers’ 41 hours (US).
In Japan, the earning rate is approximately ¥637 per hour (~$5.65/hour) before taxes and expenses. But there’s some controversy here as researchers have noted that this figure could be inflated due to ridesharing drivers’ tendency to work longer hours in the country.
Challenges Ridesharing Faces
However, ridesharing faces serious challenges. Despite strong revenue growth, the industry has yet to become profitable.
In addition to competition among companies, legal battles abound with regulators and drivers seeking employee status and wage protection.
The Ridesharing industry is in the midst of a long and sustained period of growth.
In fact, the industry’s growth is expected to continue because of several macroeconomic factors, including population growth and increased urbanization.
The growing popularity of ridesharing is also driving increased demand for Ridesharing services.
While the macroeconomic factors driving the Ridesharing industry’s growth are expected to continue over the long term, several issues could hamper the industry’s growth over the comparable period.
A number of controversies have surrounded ride-sharing services including whether or not they have been operating legally. In addition, there have been several cases in which Ridesharing drivers have been accused of assaulting passengers.
And more generally, there has been a lot of concern about whether or not Ridesharing companies can be trusted to keep their promises regarding driver pay and passenger safety.
To address these concerns and ensure that it continues to increase, the Ridesharing industry will need to improve its public image by addressing these issues head-on.
Despite its attractive growth prospects, the industry faces challenges such as low wages in some countries and regulatory hurdles that hinder competition in some regions.
For example, in New York City and London, ridesharing drivers face wage cuts due to increased competition.
In New York, ridesharing drivers’ earnings have dropped by 21% over the past nine months. In London, a recent study found that drivers earn less than minimum wage per hour after expenses are considered.
As a result of low compensation levels in some areas, ridesharing is not worth it for many drivers in the affected regions.
Despite the challenges, ridesharing continues to be attractive for many people who want extra income or part-time work with flexible schedules.
Global revenue from ridesharing will continue to grow significantly through 2025 as more people embrace this modern way of getting around in today’s urbanized economy.
Conclusion
It is estimated that worldwide, ridesharing companies today have revenues of close to US$60 billion. Assuming the base assumption of US$0.31 per minute and US$0.07 per mile, this translates into over US$100 million in revenue or roughly US$700,000 in gross profit per day (does not include other potential services such as deliveries).
Even though 1% of revenues may seem like a small amount, it is essential to remember that these firms are still in their early stages of maturity. Additionally, the competition is fierce yet growing increasingly global.
While ridesharing revenues are still low, their expansion has been meteoric. We predict that their payments will continue to rise, albeit at a slower rate than they have in the past. This is primarily because of the industry’s maturity: it seems that many of the major cities in the world already have ridesharing companies offering affordable rides. Yet there are still a few on the horizon: with such strong growth, we can expect plenty to pop up across the globe.