By on September 19, 2016

2015 Chevrolet Suburban LTZ

Yoyo believes, like other mobility disruptors, that the traditional automobile acquisition and ownership experience is broken. It maintains that the majority of consumers can be provided with more flexible, efficient, lower-cost alternatives to the incumbent model of personal mobility. However, the prevailing two-step distribution system is entrenched and the insurance, maintenance, parking, and other segments of the $2 trillion extended auto industry are not incentivized to embrace change.

Will Yoyo’s pay-per-mile subscription model participate in disrupting the calcified status quo?


I love driving. I love having a car that’s mine, ready whenever I want, with my stuff in it. And I love that I can modify it however I like. There are exactly zero alternatives to the status quo that efficiently address my needs. And I understand that much like a golfer, wine enthusiast, or travel addict, I pay a premium for my passion. But let’s be clear, neither Yoyo nor the other mobility disruptors are aimed at we passionate few. They are targeting the other 200 million licensed drivers in America.

Many retail sectors have been disrupted and some improved over the last two decades, but not those surrounding personal mobility. Owning or leasing a car is generally time and capital inefficient and in numerous respects, unpleasant. The vehicle acquisition experience is so terrible that a 2015 Autotrader study of 4,000 active car shoppers found less than 1 percent enjoy the car buying experience.

Even the research phase of vehicle acquisition could be improved. Information asymmetries abound. Insurance, for example, is a classic David versus Goliath exercise in which consumers operate with limited information and insurers maintain robust pricing power. The maintenance and repair industry is perhaps more predatory than auto retail. And there is the stressful unpleasantness associated with the end of each ownership cycle — sell, trade, donate…?

Individually owned vehicles have an exceedingly inefficient utilization rate of just 4 percent, versus 35 percent or more for livery vehicles. Moreover, most privately owned vehicles are sub-optimal for the majority of tasks they perform. Do we need or want a three-row SUV for our daily commute? No, but we “buy up” to ensure our vehicle meets our lowest common detonator of use.

As Hari Iyer, co-founder of Yoyo explained, “Consumers utilize their cars in fractions (daily commute, one seat occupied), but they purchase in whole numbers (one vehicle, two vehicles), and they often round up (three-row SUV or double cab half-ton pickup).” Consumers thus cover 99 percent of their personal use-cases with one, two, or three vehicles, but as a result they live with and pay for a product that over delivers on the vast majority of their operating requirements, on the rare occasions it is in use.

According to the Bureau of Labor Statistics, the average American adult spent $9,500 on personal transportation in 2015, second only to their housing expense. The high level of resources we allocate to mobility reflects the car-centric economy we began creating in the 1920s, committed to in the postwar period, and which has only recently shown signs of weakening. One contributing factor is America’s increasing density. The urbanization rate has increased from 70 percent in 1960 to over 80 percent today. Nominally, that equates to a doubling of the urban population, from 126 to 247 million people. And increasing population density is pivotal for the future of mobility, because it facilitates the rise of alternatives to personal vehicle ownership. Public transit becomes more efficient and disruptors, like Yoyo, enjoy a larger addressable market across which they have a better opportunity to earn the critical mass of users required for their solutions to become economically viable.

After 100 years of training, most of us are not wired to consider our personal commitment to driving on a cost per mile basis. That would require us to know our total cost of ownership, as well as the number of miles we drive. Here’s a shortcut, according to AAA, a typical sedan owner who drives 15,000 miles per year (the national average for 30-49 year olds is 13,140 miles per year) spends $0.58 per mile, or $725 per month. SUV drivers pay about a 15-percent premium.


As the future of mobility unfolds, several visions are competing for our awareness, interest, and adoption. And like the ownership-centric, vehicle-bound economy we spent the last hundred years building, the future of mobility will be shaped largely by market forces. Some of today’s visionary disruptors will win and others will be forgotten. But given the diversity of our wants and needs combined with the complexity of mobility, no single solution or provider is likely to gain a monopolistic position. There will be room for multiple competitors satisfying a variety of consumer needs.

Tesla, Faraday Future, Atieva, Elio, and others are or will soon be selling cars direct to consumers, presumably improving the vehicle acquisition experience. The direct-to-consumer manufacturers do not, however, fundamentally alter the personal ownership model. Uber, Lyft, Zipcar, and others are providing alternatives to personal ownership. Each of their solutions addresses one or more of the vexing challenges facing consumers today such as insurance, maintenance, repair, and disposal. But none offer a comprehensive solution to the high-cost, inefficient status quo.

Autonomous vehicles will also play an important role in the future of mobility. Fortunately for Yoyo, and many other disruptors, their services can develop in tandem with self-driving cars. As autonomous vehicles gain consumer acceptance, Yoyo can simply add them to their fleet without diminishing the value proposition of their subscription-based service.

Anyone who has gone all-in on Uber or Lyft for 15,000 miles per year, is paying about $0.96 per mile, or $1,200 per month. For those living in hyper-dense parking-challenged environments, UberX may represent a better solution than traditional ownership, though Uber’s convenience fades the farther one travels from populated areas. For those using a car-sharing service, such as Zipcar, the cost approaches $1.50 per mile, making car sharing a better mobility supplement than a wholesale replacement.


Yoyo seeks to simultaneously engage the collection of disagreeable, expensive, time consuming, inefficient aspects of auto ownership with a pay-per-mile subscription service.

A Yoyo subscription works like this. A consumer signs up and pays an annual fee of about $100, which grants him/her anytime access to vehicles covering every reasonable use case. Electric vehicles, city cars, mid-size sedans, trucks, and SUVs from mainstream as well as premium brands will be available. They are split into three price tiers — $0.50, $0.75, and $1.00 per mile. A smart phone is used to beckon whatever vehicle a member wants whenever they want. Delivery and collection can be affected to or from a workplace, home, airport, etc. Members pay per mile with a minimum 30 miles per day averaged over a monthly or quarterly period, depending on membership level. For example, if one has a $0.50 per mile, tier-one Ford Focus for a full month, they will pay a minimum $450, regardless of if the vehicle is operated 0 miles, 30 miles each day, or 900 miles on a single day. Drive over 900 miles that month and simply pay the $0.50 rate per mile – no high mileage discounts, no high mileage penalties.

The economics of adopting Yoyo versus traditional private ownership boil down to a pair of factors. First, how much do you drive? The fewer miles one drives the more Yoyo makes sense from a purely economic perspective. If one drives fewer than 10,000 miles per year, they can almost certainly save by using Yoyo or another car share provider. Second, to what extent does one value access to dozens of different vehicles, always driving a relatively new vehicle, and avoiding the hassles and responsibilities of ownership?

A driver operating a variety of Yoyo’s tier-one $0.50 per mile vehicles, such as a Ford Focus, Jeep Wrangler, or Mini Cooper 15,000 miles per year, will spend $625 per month, about $100 less than the average sedan owner. But don’t forget to add the cost to fuel your Yoyo, which for a 25 mile per gallon car will be about $0.09 per mile, making the cost delta between traditional ownership and Yoyo too close to call.

Location and driver age will also factor into the likelihood that Yoyo will be a fit for you. The service is being piloted to a select user group in northern California now and the company has plans to roll it out soon across the largest 35 metro areas. When Deloitte Consulting was researching its recent white paper, The Future of Mobility, it found that millennials (born 1981-2000) value the vehicle purchase experience three times more than vehicle design. This underlines the preference among younger Americans for experiences over things, making them a key target demographic for Yoyo and other mobility disruptors.

Speaking of youth, if you are envisioning Yoyo as a gritty, bootstrapped, Shark Tank-ready start-up run by sleep deprived, ramen-fueled Millennials with brains sized to match their optimism, you have part of the picture. The Yoyo team is cost conscious, probably doesn’t sleep as much as it should, and has some serious brainpower. But if they were on Shark Tank, they would be sitting on the investor panel beside Mark Cuban, not across from him. In Silicon Valley, management teams and track records count for more than the brilliance of ideas. Teams and experience are the real currencies of start-ups and they go a great distance toward determining how much capital a start-up can raise and by extension how much time it will have to demonstrate the value of its idea. Yoyo has an experienced team and the resources, relationships, and vision to be patient.

The future of mobility is coming. How fast? Nobody knows, but shared mobility already has a place in the formula. Will Yoyo be one of the lucky few to find traction and help disrupt the status quo? I would not bet against them, but we need to play the game to find out.

[Image: General Motors]

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60 Comments on “Can Yoyo, a Pay-Per-Mile Car Subscription, Shake up the Mobility Landscape?...”

  • avatar

    Frankly, I expect my next car purchase (likely in the next year or two) to be my last. I like driving, but not so much that I feel like I MUST own (or drive) my own car.

    By the time that car is ready to retire in 12-15 years or so, I imagine that just summoning a self-driving car (electric or otherwise) when I need to go somewhere will be a totally viable option.

    • 0 avatar

      Completely agree. Just like keeping up a house, ownership and worry over private cars is best left to younger, more energetic and flexible people.

      Concealed carry takes a lot of the worry out of hopping rides with strangers, too.

      • 0 avatar

        When the self-driving car arrives it will be owned, not rented. And here’s why. If I get a big enough self-driving car I can just sleep in it. I can set the car to wake up whenever and drive me to work. When I wake up I’ll be at work, take a shower somewhere, repeat at end of day. I wont really even need a house, just a parking space with like-minded individuals.

        Am I wrong?

        • 0 avatar

          sco, I plan on doing a lot of sleeping in my self-driving car (whenever that happens).

          Commuting to work. I finally get that extra 30 minutes of sleep.

          Vacations. Climb in the car on Friday night, sleep, wake up at my destination.

          Sleeping off a little to much alcohol? DWI’s will be a thing of past (for others, I’ve never had one).

      • 0 avatar

        Funny, it just had the opposite effect on me.

    • 0 avatar

      The 30 miles per day requirement is a deal breaker. If I only needed a car occasionally, a rental is better. Car2Go is a better occasional use pricing model.

  • avatar

    These ideas all make sense for people in the city who can get to work by transit and only need a vehicle for things besides getting to work. However for the rest of us the issue is that we all need vehicles *at the same time*. So being outside the city, the service is either not available in your area, or there are no vehicles when/where you need.

    • 0 avatar

      This is totally true and would be a real problem with this service. Our cars sit idle at common times and are in use at common times. How does Yoyo propose to deal with peak time usage? Surge pricing a la Uber? Forced carpooling?

    • 0 avatar

      Exactly. The times my car is idle is while I’m asleep or at work, when most other people don’t need a car either. When I do need it is rush hour, when everyone else is on the road, usually going too slow in the front lane in front of me.

      Add in the fact that for suburb-dwellers, there isn’t enough density to make it worth putting cars close enough to make sense. If you are in a city and need to walk a couple blocks for a car, that’s doable. If you need to walk a couple miles in the ‘burbs, it’s not worth it.

    • 0 avatar

      I imagine that for commuters, “the system” will have the option of participating in an ersatz carpool every morning for a greatly reduced rate.

      • 0 avatar

        They have that already, and it’s called the bus!

        • 0 avatar

          The bus is not a viable option for a ridiculous number of Americans that would be well-served by an automated on-demand carpooling service.

          (Even in many cities with regular bus service, the routes often make commutes arduous, at best.)

          • 0 avatar

            (I’m jes’ bein sarcastic and contrary.) This service will apply to very few people, and will likely exist for 3-5 years before being cancelled or purchased by Uber/etc.

    • 0 avatar

      All these companies operate on the mistaken assumption that people buy cars like they buy appliances, it’s just a tool to get around. If that were true, the only car on sale would be shaped like a washing machine and come in white or black, like Kia Soul. Sure there’s a market for taxi cabs, there always have been, did taxis even come close to putting a dent in car ownership in the US? All this talk is just investor baiting. People who can afford cars are always going to buy cars. If they start coming with a true self driving option, people with the means are still going to want their own, rather than share a seat with a smelly “poor” person that otherwise would be taking the bus.

  • avatar

    The name reeks of try-hard fail stink.

  • avatar

    “Mobility disruptor” must be a catchphrase for overpriced leasing company.

    “For example, if one has a $0.50 per mile, tier-one Ford Focus for a full month, they will pay a minimum $450…”

    You must be joking. The primary disruption there is to ones wallet.

    Honestly, this article reads like a press release. It’s one thing to be impressed with the company, but this sounds more like advertising.

  • avatar

    The ominous “they” want us out of our personally owned and controlled automobiles at any cost. Having failed to win us over with busses and trains, now we have car sharing, car renting etc. We will be so much easier to control once we lose our freedom of movement.

  • avatar

    “Consumers utilize their cars in fractions (daily commute, one seat occupied), but they purchase in whole numbers”

    Isn’t this true of pretty much EVERYTHING?

  • avatar

    There’s two broad ways of viewing PPC use.

    In rural and suburban areas, PPC isn’t and never will be a practical service when compared to owning /leasing a car. Paying an operating premium makes sense when it enables on-demand use of a car.

    In a city the dynamic changes. City stickers, monthly parking fees, higher fuel prices, expensive registration costs, high insurance premiums plus risk of vehicle damage due to crime (broken windows) , bad drivers( missing mirrors and scratched bumpers) and decaying infrastructure maintenance (rim busting potholes) make sharing a car valuable even before calculating the per-mile cost reduction..

    • 0 avatar
      01 Deville

      Nailed it. Discussion closed.

    • 0 avatar
      87 Morgan

      Spot on. I’m thinking of the Manhattenite or even someone from the outer Burroughs who rides the train to downtown during the week, this would be perfect.

      It was mentioned in one thread about peak usage, which i could see as a problem. Hard to have enough econo cars for the during the week crowd and enough SUV/MiniVan for the weekend family hauling duties.

      • 0 avatar

        This would be as perfect as taking a cab. Most people in Manhattan don’t do that instead of taking the train because it’s too expensive. Lyft and Uber are cheap because they are basically employing below minimum wage labor they’ve duped into also supplying and maintaining a car. What do you think a ride on Uber is going to cost when the company also have to foot the bill for a quarter million dollar self driving car that runs 24/7? I’m afraid the future isn’t as bright or as cheap as everyone thinks. The economics of running personal vehicles for mass transit is never going to come out ahead of trains and buses, even with the government running them.

    • 0 avatar

      This brings up a good point that I didn’t see covered in the article: vehicle damage. Does the annual fee include insurance for bumps and bruises to the vehicle? As you pointed out, damage in the city is more likely. How about accidents, what happens if you total a car? Will your ‘rates’ go up when you become a higher risk? What about medical coverage? When I pay for insurance out of my own pocket I choose liability coverage limits, do you get options when you sign up or are you forced into a plan? Or would you have to take out a separate policy if you want higher limits?

      Here is what the yoyo faq says about the issue, doesn’t answer everything but it’s a start.

      1. What’s the insurance coverage?

      Every member in good standing who complies with the membership contract is covered while driving a YOYO. Here are the highlights:

      – Third party auto liability coverage

      – Members age 25+ receive liability coverage of 100/300/25 ($100,000 bodily injury per person, $300,000 bodily injury maximum, $25,000 property damage). We provide Personal Injury Protection (PIP), or “no-fault” coverage, at the level required by the jurisdiction in which the accident occurs.

      – Members are responsible for a $1,000 damage fee per incident, which can be reduced or eliminated with the purchase of an optional damage fee waiver.

      *Please note that coverage may be provided under a certificate of self-insurance, insurance policy, or both.

  • avatar

    I used to live in the city, and I used car2go but the service was unreliable when major events happened, people would come in from the burbs, part around the city, and bring the fleet of cars to the free parking spots near the stadiums and it was so unreliable that I kept my car.

    I changed jobs and moved out to the country for cheap rent, and started putting 13k miles/yr on my car. Then I got yet another job in some burbs and moved one block away from work (7 minute commute door to desk, holla).

    Now, I estimate I’ll drive 3000-4000 miles/yr. But 25% of that driving will be trips on Sunday for family meals.

    The amount of driving I do is too variable for leasing, and my parking spots are too insecure for leasing (you should see all the mysterious scrapes and scratches on my bumper) so I own a reliable, 5k used car and want to drive it until self-driving cars take off.

    But none of these transportation solutions is a silver-bullet. And you’ll know a silver bullet because it’ll be comprehensive. It’ll work for someone who owns a car but needs extra capacity for a trip to the cabin. It’ll work for someone who uses a car intensively for one day a week but unintensively the rest of the time. It’ll work for commuters and people who need to go to the grocery store.

    And this isn’t it. This is an expensive car lease. You may as well lease a CPO vehicle with a warranty.

  • avatar

    The automakers would like nothing better than to see the end of traditional car ownership. If shared mobility schemes could be made to work, it would spell the end of the boom/bust cycles for automakers and the costs that are associated with those cycles. From the time cars left the factory to the time they appeared in the recycling yard, cars would have a life cycle that would be relatively easy to predict.

    • 0 avatar

      I don’t think you’re thinking about China.

      It’s still 1950 America over there.

    • 0 avatar

      GM used to depend heavily on fleet sales, it was a major contributor to their demise. You put all your eggs into one basket and suddenly your fortunes are tied to that basket. When people stopped renting cars, rental companies stopped buying them. GM sales numbers went into negative sustainability in a hurry. No amount of flashy TV ads or dealer incentives is going to sway a buyorr 2 million cars that they need to change their mind about not buying any this year.

  • avatar

    ” it found that millennials (born 1981-2000) value the vehicle purchase experience three times more than vehicle design.”

    Yeah, we’re overall pretty stupid that way.

    • 0 avatar
      DC Bruce

      What does “value the vehicle purchase experience” mean? That statement left this aging boomer’s head dazed and confused.

      • 0 avatar

        Yeah… that’s like valuing the time a dog bit your ass requiring old fashioned rabies shots in the same place.

      • 0 avatar

        Young people enjoy an easy purchase experience, where they’re willing to pay more as long as there’s fair trade coffee in the showroom, and they don’t have to haggle. Ideally they don’t have to deal much with a salesman, and can purchase via tablet.

        Even if they’re not getting good product, they need to -feel- positive, appreciated, safe, and loved.

        Substitute “Apple Store purchase experience” and that works too.

      • 0 avatar

        It means they want an Apple Store for their car, and they could give 2 flying farks about the product as long as it has the correct logo on it.

        EDIT: Lol, just read Corey’s comment which said the same thing 6 minutes earlier. In my defense I was busy getting a cup on non-fair trade Starbucks from the free coffee machine at work.

      • 0 avatar

        I think they mean that they want an Apple store for buying cars, not just for the logo mind you, they all want to pay the same inflated high price and don’t have to feel bad about not arguing about it because everyone gets it in the ass, no exceptions. Tesla has already laid the ground work for this, anyone who thinks they are getting a “discount” because Tesla doesn’t have those “greedy dealerships” in the loop, deserves to lose the extra $10-20k they hand to Elon Musk instead of their local economy.

      • 0 avatar

        It means they want a reach around during negotiations. /feelsgoodman

  • avatar

    Would this perhaps pencil for my tow vehicle? I have a 6000lb travel trailer that I need to drag around about 2500 miles per year. My tired 1996 K3500 sits around a lot, but is absolutely necessary when it’s time for an RV trip. I’d love to replace it with something nicer, but I’m not going to spend $40K for a rig that I only drive 5000 miles a year.

    • 0 avatar

      I suspect that autonomous power units for trailering will become a thing. You’ll whistle up a tractor like a yard tug, hitch it to your trailer, and ride in a regular passenger vehicle. That also eliminates one of the problems of renting a regular truck for horse/boat towing: a regular rental truck usually is disgusting inside, and luxury trucks usually aren’t available to rent for towing. So you just ride in your nice passenger car.

  • avatar

    Ride sharing or different ownership models will take off when it is as convenient as walking out your door and getting into your parked car AND the cost is on par or better than the current model. That’s pretty much it isn’t it. I don’t want to wait, I don’t want to carpool with strangers and I don’t want to pay more.

    Self driving cars could basically take care of the “on demand” problem. You simply summon them with your phone a few minutes ahead of time, provided of course there are enough cars in your area to meet demand. Lot of ifs.

    Its coming guys, it will happen. Maybe not for decades, but its coming.

  • avatar

    It sounds like the perfect solution for retirees. I’m completely serious. They have little need for peak use car availability and they have fixed incomes that can benefit properly from on demand billing and an elimination of surprise expenses. Unfortunately, no Silicon Valley enterprise would characterize their product in those terms unless it was a wifi controlled digital dong inflator or something similarly youthful. Doesn’t make it a bad idea, I just doubt it will be marketed most effectively or in the right zip codes. If they can swallow grey hair in commercials, aarp discounts and a business that revolves around places like Tampa and Scottsdale I bet they’d do fine.

    I agree with pch by the way. This article absolutely reads like a press release.

  • avatar

    Um, you wrote : “But don’t forget to add the cost to fuel your Yoyo, which for a 25 mile per gallon car will be about $0.09 per mile, making the cost delta between traditional ownership and Yoyo too close to call.”

    It seems like based on the website for yoyo that the gas is included.

  • avatar

    I swear that these “transportation disrupters” are doing little more than preying on the youth who can’t afford to buy a car. It feels a lot like, “Oh, I can’t have this? Well, you’re stupid and I didn’t want it anyway.”

  • avatar

    I almost broke the soapbox out and railed against this, but here is the deal:

    13140 x 0.50 = $6,750
    13140 x 0.75 = $9,855
    13140 x 1.00 = $13,140

    I don’t spend $6,750 on three cars I own at somewhere between 10K and 12K miles per year with insurance and all repairs (tires too) with no mileage deductions or the like.

    What’s that old saying about a fool and his money again?

    Enjoy it rubes.

    Equity wins.

    • 0 avatar

      I just worked it out for my $3,200 volvo with repairs insurance gas (averaged at 2.35 a gallon) and assuming a $1,500 current value I’m at $0.26 per mile including a set of tires and a $1200 cam seal replacement. Sorry but the math just doesn’t work.

  • avatar

    A 10 year old Honda Civic or Accord (or Toyota equivalent) that has been well maintained beats Yoyo math to a pulp. If you’re going to be frugal…why spend monthly at all.

    • 0 avatar

      Yes it beats, but those are still pricey (10Kish in many cases). Lease same new Toyonda @ 0%, then buy it out and keep 12 years (roughly 2K per year not including final residual).

  • avatar

    I miss that days when RF imposed a strict length limit on postings. He also didn’t allow quick rewrites of press releases :(.

  • avatar

    This sentence is what really caught my attention, over the actual subject of the article : “The vehicle acquisition experience is so terrible that a 2015 Autotrader study of 4,000 active car shoppers found less than 1 percent enjoy the car buying experience.”

    If you REALLY wanted to achieve ‘mobility disruption’, open a dealership where you post, in full public view, the actual retail price you paid for each vehicle on your lot. Show all of the rebates, discounts, kickbacks, etc. related to every one. Tell people you’re running a business, not a charity, and show a reasonable profit margin tacked on to the final number. Let people who like negotiating do so on the trade-in value of their old car, not the price of the new car. Refuse to do any foolish financial chicanery or add-ons. I would think customers would be lined up around the block while other dealerships would resemble ghost towns.

    On the other hand…Saturn. Never mind.

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