Vehicle Leases – An alternative vector for road pricing

The ownership model under Mobility-as-a-Service has often presented the dichotomy of an owned autonomous vehicle, the way Americans most typically use cars, vs. a shared autonomous vehicle (autonomous vehicles that come to you like a taxi). But many automakers are now trying to move customers to the leasing model of vehicles, which gives owners a long-term stake in an individual car, but not full ownership rights. The reasons a customer may prefer a lease is that technology is rapidly changing, and who wants to get stuck with an out-of-date vehicle. Alternatively, they may anticipate their tastes or needs change, and don’t want the hassle of resale. Automakers have often leased things like Electric Vehicles which require a major overhaul at some point in time, and this also gets them a built-in service business, as the incentive for a lessee  would otherwise be to not service the vehicle and run-down capital stock, while the lessor wants to maintain capital so they can re-lease (or sell) the vehicle subsequently after the expiration of the lease.

A Political Economy of Access: Infrastructure, Networks, Cities, and Institutions by David M. Levinson and David A. King
A Political Economy of Access: Infrastructure, Networks, Cities, and Institutions by David M. Levinson and David A. King

Moving automobile ownership to the lease model, particularly with EVs, provides another advantage, this one for the road administrators. It reduces the number of players who own cars and makes a new model of road service provider possible.

Suppose, instead of purchasing road services from the government, (now via gas tax, later via mileage based user fees), travelers would purchase transportation services (the right to travel at a location at a time for a price) from independent road service providers. Road service providers (RSP) would purchase capacity from the infrastructure owner (presumably the government [or a government-like non-profit road utility]). If an RSP’s customers over-consumed the road, the RSP would pay a penalty. RSP would charge its customers accordingly to maximize profits in this new competitive market.
What does this allow?

(1) It allows competing RSPs to offer a variety of bundled services to customers (a per use charge, a charge for a the right to travel 10 times per month, or unlimited service, or service bundled with cell phones, or insurance or other services e.g), but to each have different bundles. RSPs are likely to be better at product differentiation and price discrimination than governments with omnipresent political and equity concerns.

(2) It allows the government to stay out of the data ownership business, it would be responsible only for identifying which RSP a traveler subscribed to, and thus would eliminate “the government is tracking me” problem with road pricing. (We still have big brother business is tracking me, but if you have a cell-phone or credit card, that game is already lost)

(3) It provides new markets for private industry. This could be an app as part of a cell-phone or GPS or in-vehicle service (e.g. OnStar) or insurance (AAA, Progressive). The only technology standard that would need to be established by the government is a simple (e.g. RFID) sticker adjacent to the license plate verifying the RSP and the government with inexpensive RFID readers to count the number of cars on each link by time of day with the RSP. The private firms would be responsible for monitoring their own customers.

(4) It provides a more stable revenue stream from government, which is getting revenue directly from RSPs who bid on road space. In congested areas, road space would go for a higher price, in uncongested areas, RSPs would negotiate a per-use charge with governments.

Part of the lease can include terms about when and where you can use the road. Just as lease terms today allow X miles per year, new terms could be Y peak hour miles, and Z off-peak miles. The automaker/vehicle owner would then compensate the road owners for use of the roads by the cars they lease-out, while setting rates and incentives for vehicle users/leaseholders to manage their demand. Private firms would be able to explore demand space and develop interesting combinations of services (the price for traveling on certain facilities at certain times) in a way that the public sector just cannot do for issues of both capability and fairness.