Shared mobility should be subsidised until we charge true cost of car ownership

Director of Pine Economics Omer Ber offers his analysis on why Zipcar is withdrawing from the UK market and what should be done to make car clubs viable

 Zipcar’s departure from the UK is troubling, and it reveals an uncomfortable truth about sustainable transport: cities bear the costs while the nation reaps the rewards.

The economics is simple. Each shared car replaces 20-30 privately owned vehicles, according to CoMoUK, delivering monetisable benefits consistent with government guidance: freed up space, improved air quality, reduced CO2 emissions, less congestion, and lower car ownership costs.

But for cities, these benefits come with fiscal pain. London's parking surplus reached £600m in 2024 - not a rounding error when the Underground costs about £2.8bn annually to operate. Removing cars shrinks this income. Fewer trips also reduce congestion charge and ULEZ receipts. Meanwhile, the health and efficiency benefits flow to central government through reduced NHS expenditure, higher income tax, and GDP growth.

According to Director of Connected Mobility Stephen Bee, car clubs pay 20 times the resident rate for the same parking space. Once you understand the fiscal dynamics, this makes sense: benefits accrue nationally while costs are borne locally, and cities try to recover lost revenue.

In an ideal world, yearly resident parking permits would cost 10-20 times their current price, reflecting the true cost of space consumed by cars. In Islington, annual housing rent is about £40 per square foot; parking permits cost roughly £2 - £3 per square foot. In that world, more people would give up car ownership, freeing kerb space and increasing demand for shared vehicles.

In our current world, non-car owners subsidise car owners twice: by losing valuable public space, and by paying higher parking rates through shared cars.

Short term, I hope cities recognise that the Laffer curve applies: excessive charges yield zero revenue when operators exit the market.

Longer term, so long as we don’t charge the true cost of car ownership and use, shared mobility will need support, just as we subsidise other forms of sustainable transport.