One of the many differences between Canada and the US is that our roads are less deadly. A new study by the US Insurance Institute of Highway Safety and the Canadian Traffic Injury Research Foundation found that between 2010 and 2020, total road deaths in the US rose 18%, while in Canada they declined 22%.
This "crash gap" also widens when you look at deaths per vehicle mile driven (as opposed to per capita), which should, in theory, normalize the fact that Americans tend to drive more on average than Canadians. So why might this be? Both countries are broadly car-oriented, at least compared to the rest of the world.
One of the many differences between Canada and the US is that our roads are less deadly. A new study by the US Insurance Institute of Highway Safety and the Canadian Traffic Injury Research Foundation found that between 2010 and 2020, total road deaths in the US rose 18%, while in Canada they declined 22%.
This "crash gap" also widens when you look at deaths per vehicle mile driven (as opposed to per capita), which should, in theory, normalize the fact that Americans tend to drive more on average than Canadians. So why might this be? Both countries are broadly car-oriented, at least compared to the rest of the world.
The study presents a number of possible explanations: Canada has stricter drunk driving laws, Canada uses more traffic cameras, Canadians are relatively poorer and therefore drive less, Canada has higher gas taxes (which discourage driving), and the list goes.
But my unproven theory is that a lot of this gap can be explained by differences in the built environment. Solutions like traffic cameras are, to give just one example, what you do when you've failed to design the road you actually want. They're patches, not fixes.
So when it comes to Canada vs. the US, I suspect that much of the gap can be explained by differences in the physical environment and higher transit usage north of the border. It probably also explains why Canada is safer than the US, but not safer than Europe when it comes to transportation-related fatalities. We're simply not urban enough.
The simple takeaway is that the more you optimize your environment for cars, the more dangerous you make it for humans.
That said, this is likely to change with the continued adoption of autonomous vehicles. We can (and should) debate whether it's prudent to plan our cities around them, but I think there's little doubt that we'll see road safety increase dramatically.
One thing that I do not do on this blog is provide investment advice. And this post is certainly not that. But here's an idea and thought exercise that relates to urban mobility. Let's assume you own a personal vehicle that is currently valued at US$30k, and that this car is what you use to go about your daily life. Now imagine that you sold this car today, harvested all of the proceeds, and invested them into the following three companies: Uber, Alphabet, and Tesla. If you did this equally, your US$30k would end up as the following (based on today's share prices and if rounded down):
111 shares in Uber ($89.56/share)
49 shares in Alphabet ($201.42/share)
30 shares in Tesla ($329.68/share)
Then, instead of driving yourself around, you'd put the money that you would have normally spent on insurance, gas, and maintenance toward Ubers and Waymos (assuming Waymo is available in your city). Perhaps you even own a parking spot that could be rented out for an extra few hundred dollars each month. Whatever the specifics, let's just assume that what you used to spend to operate and service your car is now being spent on getting around using ride sharing services. It's a wash. So the only difference is that instead of having US$30k tied up in a depreciating asset, you're now part owner of the above three businesses.
This, once again, is not investment advice. I personally don't know how to make sense of Tesla's current valuation. There's a hell of a lot of optimism being priced in. I'm simply picking these three companies as a way to bet on Waymo's autonomous vehicle program (which is currently in the lead), Tesla's robotaxi promises (which, who knows, could actually materialize), and the fact that Uber might still remain the dominant marketplace for rides (though there's already evidence that Waymo is on track to overtake Uber in San Francisco within the next ~8 months).
It's not clear who will be the primary beneficiary of this shifting mobility landscape. Is Tesla right about
At the risk of sounding obvious, pricing is fundamental to the functioning of markets. It determines profitability, it allocates resources, and it influences customer behavior, among other things. Take the example of electricity pricing.
In Ontario, we use something called time-of-use (TOU) pricing. What that means is that electricity rates vary according to the time of the day and the time of the year. In the summer, the expensive peak usage period is the afternoon (because of air conditioning) and in the winter it's the morning and early evening (because of heating and lighting when people are generally not at work).
What this pricing strategy does is incentivize customers to change their consumption behaviours. Instead of doing laundry during a peak period, maybe you set a timer and have it run during a low-peak period. In other words, it helps to flatten the demand curve. This is valuable for utility providers because peak periods are more expensive to supply and they also create the risk of brownouts and blackouts. So you worry about peak demand.
With this in mind, let's now switch and talk about highway congestion. The parallels are almost identical, and yet, most highways are free to use, which means we do absolutely nothing to manage peak demand. Instead, we encourage the equivalent of brownouts where demand greatly exceeds supply, traffic crawls, and roads become practically unusable. Why is that? Why should highways be viewed any differently?
In the case of highways, there are even alternatives such as transit (thought not always, of course). But if you need electricity from a monopolistic utility provider, you're paying whatever rates they charge. As you might expect, the answer is not technical or economic. We know with 100% certainty that pricing congestion will reduce it. The reason we don't do it is political. Free roads are preferred to functioning roads.
The study presents a number of possible explanations: Canada has stricter drunk driving laws, Canada uses more traffic cameras, Canadians are relatively poorer and therefore drive less, Canada has higher gas taxes (which discourage driving), and the list goes.
But my unproven theory is that a lot of this gap can be explained by differences in the built environment. Solutions like traffic cameras are, to give just one example, what you do when you've failed to design the road you actually want. They're patches, not fixes.
So when it comes to Canada vs. the US, I suspect that much of the gap can be explained by differences in the physical environment and higher transit usage north of the border. It probably also explains why Canada is safer than the US, but not safer than Europe when it comes to transportation-related fatalities. We're simply not urban enough.
The simple takeaway is that the more you optimize your environment for cars, the more dangerous you make it for humans.
That said, this is likely to change with the continued adoption of autonomous vehicles. We can (and should) debate whether it's prudent to plan our cities around them, but I think there's little doubt that we'll see road safety increase dramatically.
One thing that I do not do on this blog is provide investment advice. And this post is certainly not that. But here's an idea and thought exercise that relates to urban mobility. Let's assume you own a personal vehicle that is currently valued at US$30k, and that this car is what you use to go about your daily life. Now imagine that you sold this car today, harvested all of the proceeds, and invested them into the following three companies: Uber, Alphabet, and Tesla. If you did this equally, your US$30k would end up as the following (based on today's share prices and if rounded down):
111 shares in Uber ($89.56/share)
49 shares in Alphabet ($201.42/share)
30 shares in Tesla ($329.68/share)
Then, instead of driving yourself around, you'd put the money that you would have normally spent on insurance, gas, and maintenance toward Ubers and Waymos (assuming Waymo is available in your city). Perhaps you even own a parking spot that could be rented out for an extra few hundred dollars each month. Whatever the specifics, let's just assume that what you used to spend to operate and service your car is now being spent on getting around using ride sharing services. It's a wash. So the only difference is that instead of having US$30k tied up in a depreciating asset, you're now part owner of the above three businesses.
This, once again, is not investment advice. I personally don't know how to make sense of Tesla's current valuation. There's a hell of a lot of optimism being priced in. I'm simply picking these three companies as a way to bet on Waymo's autonomous vehicle program (which is currently in the lead), Tesla's robotaxi promises (which, who knows, could actually materialize), and the fact that Uber might still remain the dominant marketplace for rides (though there's already evidence that Waymo is on track to overtake Uber in San Francisco within the next ~8 months).
It's not clear who will be the primary beneficiary of this shifting mobility landscape. Is Tesla right about
At the risk of sounding obvious, pricing is fundamental to the functioning of markets. It determines profitability, it allocates resources, and it influences customer behavior, among other things. Take the example of electricity pricing.
In Ontario, we use something called time-of-use (TOU) pricing. What that means is that electricity rates vary according to the time of the day and the time of the year. In the summer, the expensive peak usage period is the afternoon (because of air conditioning) and in the winter it's the morning and early evening (because of heating and lighting when people are generally not at work).
What this pricing strategy does is incentivize customers to change their consumption behaviours. Instead of doing laundry during a peak period, maybe you set a timer and have it run during a low-peak period. In other words, it helps to flatten the demand curve. This is valuable for utility providers because peak periods are more expensive to supply and they also create the risk of brownouts and blackouts. So you worry about peak demand.
With this in mind, let's now switch and talk about highway congestion. The parallels are almost identical, and yet, most highways are free to use, which means we do absolutely nothing to manage peak demand. Instead, we encourage the equivalent of brownouts where demand greatly exceeds supply, traffic crawls, and roads become practically unusable. Why is that? Why should highways be viewed any differently?
In the case of highways, there are even alternatives such as transit (thought not always, of course). But if you need electricity from a monopolistic utility provider, you're paying whatever rates they charge. As you might expect, the answer is not technical or economic. We know with 100% certainty that pricing congestion will reduce it. The reason we don't do it is political. Free roads are preferred to functioning roads.
) still be needed to manage peak demand loads? Is the asset-heavy approach of owning AV fleets the wrong way to go about things for Waymo? I think it all remains to be seen. But I also think it's clear that autonomous vehicles have arrived and that urban mobility is changing right now, as we speak.
So I think there's a relatively high probability that everyone who owns a personal vehicle would be better off if they did what I am suggesting in this not-investment-advice-don't-do-what-I-write blog post. In other words, if we freed ourselves of the old ways and made some bets on the future. And that's ultimately the purpose of this post. It's so that you and I can come back to it on August 10th, 2030, and see how I did with my prediction. The reminder has been set.
) still be needed to manage peak demand loads? Is the asset-heavy approach of owning AV fleets the wrong way to go about things for Waymo? I think it all remains to be seen. But I also think it's clear that autonomous vehicles have arrived and that urban mobility is changing right now, as we speak.
So I think there's a relatively high probability that everyone who owns a personal vehicle would be better off if they did what I am suggesting in this not-investment-advice-don't-do-what-I-write blog post. In other words, if we freed ourselves of the old ways and made some bets on the future. And that's ultimately the purpose of this post. It's so that you and I can come back to it on August 10th, 2030, and see how I did with my prediction. The reminder has been set.
