December 23, 2020

Ride-hail, rideshare or e-hail? Making sense of modern transportation terms

Nikhil Venkatesa

Table of Contents

When Uber and Lyft were founded (2009 for Uber, 2012 for Lyft), they billed themselves as "rideshare" companies. This term was a function of their association with the sharing economy, which was popularized by companies like Airbnb. At the time, rideshare companies used a model where drivers listed on these platforms shared rides with riders in exchange for a recommended donation fee.

Since their founding, however, their status as rideshare companies has been debated by the media and academia alike. In its place, terms like "ride-hail" and "e-hail" have been used to describe them.

We wanted to break down each of these terms — what they mean, what distinguishes one from the other, and where taxi companies fit into the picture.

What is ride-hailing?

Ride-hailing refers to the activity of a rider hailing a ride from a driver in order to go to a specific location. Ride-hailing services are typically paid services and not provided free of charge.

Ride-hailing: The activity of a rider hailing a ride to travel to a specific location.

What are ride-hailing companies?

Photo by Thought Catalog on Unsplash

Ride-hailing companies are companies that provide ride-hailing services to drivers and riders.

For drivers, ride-hailing companies provide the technical and operational infrastructure to be registered as a ride-hail driver and get on the road. They also match drivers with riders looking for rides on the platform.

For riders, ride-hailing companies provide the technical and operational infrastructure to book rides on their platform with their drivers. They also provide support infrastructure to resolve any issues or answer questions riders have related to their services.

Both taxi companies and companies like Uber are ride-hail companies, but they are regulated differently. While there are several differences in how they’re regulated, the biggest one worth keeping in mind is that taxi companies can accept ‘street hails’, where riders can flag them on the street, while Uber and Lyft can only accept hails that come in through their mobile and web apps, or “e-hails”.  

Taxi companies can accept e-hail rides with Mobile22’s mobile and web apps. Click here to learn more about how we accelerate growth and cut costs for taxi providers nationwide.

Why are taxi companies and Uber & Lyft regulated differently?

The difference in regulations between the two stems from a matter of timing and positioning.

Taxi companies have been operating in the US since the early 1900s. Until the arrival of Uber and Lyft in the late 2000s and early 2010s, they were the only for-hire private transportation available in a local market. They've had long-standing regulations around their operations for decades now.

Another reason why both types of companies are regulated differently is because Uber and Lyft label themselves as technology companies and not transportation providers (Uber's legal name is Uber Technologies, Inc.). They also don't own any of the vehicles that operate on their network, which makes it difficult to regulate them like taxi companies.

How big is the ride-hailing market?

A question that is often asked in discussions around ride hailing is the size of the ride hailing market. According to Goldman Sachs, the ride-hailing market was worth $1.8 trillion in 2019 and is poised to reach $4 trillion in 2030. However, these estimates were made before the COVID-19 pandemic, which had a significant impact on the market.

What is ridesharing?

Ridesharing refers to the activity of people sharing rides or transportation together. It’s also referred to as carpooling in several countries. The most well-known ridesharing service outside the US is BlaBlaCar, which currently operates in 22 countries, including Brazil, India, France and Russia. In the US, Waze has been making inroads in the ridesharing market for a few years now.

Ridesharing: The activity of people sharing rides or transportation together

How does ridesharing work?

Ridesharing services match people driving in one direction with riders who wish to travel in the same direction. People offering rides on the service can quote a price for their service from riders who wish to ride with them.

What are the differences between rideshare and ride-hail companies?

There are several differences between rideshare and ride-hail companies like Uber and Lyft. Three of the biggest ones are in their:

  1. Operating models
  1. Pricing models
  1. Regulations

Operating models

Rideshare drivers offer rides on rideshare platforms and are then matched with riders who wish to head in the same direction.

Ride-hail drivers, on the other hand, are matched with ride requests that riders make on the ride-hail platform.

Ridesharing is mostly used on long-distance trips. Photo by Alex Jumper on Unsplash.

Ridesharing and ride-hailing also differ in terms of their primary use cases. Rideshare trips are usually taken for long-distance journeys — the average BlaBlaCar ride distance is 200 miles. Ride-hail trips, on the other hand, are typically taken for shorter distances within a city or a town — the average Uber ride is 5 miles. Waze is taking a different approach with its ridesharing platform, focusing on daily commutes than inter-city travel, but it remains to be seen whether it will be successful at taking that approach.

Ride-hail companies also often leverage their driver network to provide additional services on top of their transportation services, like deliveries. Ride-hail companies like Uber, Grab and many taxicab companies offer delivery services as an additional source of revenue for their business.

Since rideshare companies don’t have a dedicated driver network they can leverage, they tend to focus only on transportation and adding multiple modes of shared transport. For example, BlaBlaCar has expanded into providing shared transport in buses with its BlaBlaBus service.

Pricing models

Rideshare and ride-hail companies differ in terms of how they price their services.

Uber and Lyft charge a commission from the fares earned by drivers. This commission varies between 20% to 40% of the fare, depending on the market. Fares are priced dynamically, based on real-time supply and demand. This dynamic pricing model created the surge model that became synonymous with ride-hail services, where excess demand drove up fare prices.

Taxi companies don’t have dynamic pricing like Uber and Lyft. Fares are fixed and are set by local authorities. Cities either adopt a distance and time-based pricing model or a zone-based pricing model. For example, Green Cab uses a zone-based pricing model set by the City of Madison.  

Both taxi companies and Uber and Lyft are required to show riders their fares for each ride. Here’s how we show riders their fares in the Mobile22 iOS App:

Rideshare companies charge transaction fees to riders, typically around 15% of the ride cost. Rideshare companies also provide recommended prices to both drivers and riders so that drivers can’t profit off rideshare trips on the platform.

Regulations

Rideshare and ride-hail companies are regulated differently from each other.

There are no formal regulations that rideshare companies need to abide by since they aren't offering rides on their platforms for a profit. As a result, rideshare trips fall outside the scope of commercial transportation regulations. Most local regulations around rideshare trips concern the use of High-Occupancy Vehicle (HOV) lanes and how many people need to occupy a vehicle for it to be able to use the HOV lane legally.

As mentioned before, ride-hail companies are subject to extensive regulations at the state and local level, with taxi companies and Uber and Lyft subject to separate sets of regulation. The scope of regulation can vary between taxi companies and Uber and Lyft. For example, in Wisconsin, Uber and Lyft are regulated at the state level while taxi companies are regulated at the city level.

Is Uber a ridesharing or ride-hailing company?

As you might have guessed by now, Uber is a ride-hailing company, not a rideshare company. It's not a rideshare company because:

  1. Uber drivers cannot quote their own prices for rides booked with them.
  1. Uber drivers are not matched with riders after offering rides on the platform — rides are generated by riders who wish to go from one location to another, and these rides are then matched with drivers who are close to the rider's pickup location.
  1. Uber is regulated differently because it provides commercial mobility services.
  1. Uber has strict driver policies to provide consistent quality of service, unlike rideshare companies, which take a more hands-off approach to driver management.

Although, by definition, Uber is a ride-hailing company, its consistent usage of rideshare to describe itself has permeated into how the media talks about it. As recently as this month, data company Second Measure referred to both Uber and Lyft as rideshare companies. This usage of the rideshare label for ride-hail companies is bound to continue into the future.

What about e-hailing?

Electronic-hailing, or e-hailing, refers to hailing taxis with a mobile or web app. While the term is informally used for any mobile app with which riders can book rides with taxis, in New York City, there are regulations around e-hail technology providers and which e-hail apps are licensed by the New York Taxi and Limousine Commission (TLC).

E-Hailing: Hailing taxis electronically, with a mobile or web app.

Mobile22 offers an e-hail tech solution for taxi companies in our platform. We provide taxi companies with mobile and web apps that their riders can use to book rides with them. We also provide backoffice tools for taxi providers, including a call center, dispatch portal and driver management and vehicle management systems. You can check out our platform by scheduling a demo with our sales team here.

Make sense?

If you've read this post all the way through, you should have a clear understanding of what ride-hail, rideshare and e-hail all mean in the context of the modern consumer transportation industry. While there is some overlap among these terms, there are clear distinctions that make the usage of one of these terms more appropriate than the others.

Mobility and transportation have rapidly evolved over the past decade with multiple options available to consumers across various modes of transport. With autonomous and electric vehicles poised to make an entrance in the next decade, it's only a matter of time before we deal with an entirely new set of terms!

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