Just now
Rising inflation in the wake of the pandemic created a national cost of living crisis that reshaped the financial realities of many Americans. While inflation has slowed from its peak, the cost landscape remains uneven, with prices easing in some areas but surging in others. Overall inflation continues to strain household budgets, leading many to turn to flexible income sources to manage rising expenses.
This blog post provides an overview of how different costs evolved in 2024, and examines their impact on drivers and the marketplace.
- Average fuel prices decreased 6% year-over-year¹, while personal auto insurance premiums saw double-digit increases.²
- Along with higher prices for household essentials like housing and groceries, higher costs of vehicle ownership made flexible work on Uber an attractive means of earning additional income.
- Skyrocketing commercial auto insurance costs posed challenges for rideshare affordability.
All vehicle owners, whether they earn through rideshare or not, incur two types of costs: variable and fixed. Variable costs are directly connected to vehicle mileage and include gas, maintenance, repairs, and depreciation due to vehicle wear and tear. In contrast, fixed costs do not change based on vehicle usage. These costs include registration fees, financing, vehicle depreciation due to aging, and personal auto insurance.³
Most Uber drivers would own a vehicle — and pay the same fixed costs — regardless of whether they’re earning on a rideshare app.⁴ Over 90% of the U.S. population belongs to a household with a car. And our analysis of driver mileage across several U.S. markets shows that drivers accumulate the majority of their mileage outside of Uber. For example, 54% of drivers in Phoenix drive less than half of their miles on Uber trips. Even long-term drivers on the platform primarily use their vehicles for other purposes. In Washington DC, for instance, 57% of experienced drivers who have been on the platform for more than a year logged less than half of their mileage on Uber.
This distinction between fixed and variable costs illustrates why the IRS standard mileage rate — $0.70 per mile in 2025 — is an irrelevant benchmark for the cost of driving on Uber. The IRS rate is designed to cover the cost of vehicles purchased expressly for business purposes and therefore includes fixed costs. And, even if fixed costs were relevant, the IRS rate would still overstate rideshare driver expenses since it’s intended to cover a diverse pool of vehicles, including vans, pickups, and panel trucks. These vehicles are common for businesses but are rare for rideshare.
Looking only at variable costs to estimate take-home pay is consistent with third parties, including the RideshareGuy. Recent estimates of typical variable costs range from $0.26 to $0.35 per mile, depending on the time, geography, data sources, and methodology.
When it comes to earning on Uber, different costs impact driver behavior in different ways. Increases in variable expenses like gas make driving on the platform less attractive. When gas prices surged in 2021, many drivers reduced their hours or left the platform, while others adapted by switching to fuel-efficient or electric vehicles. In response, Uber enacted a $0.45–0.55 per trip fuel surcharge⁵, with 100% of that money going directly to drivers to help cover their costs.
In contrast, rising vehicle fixed costs, such as personal auto insurance, impact drivers similarly to inflation in essential household expenses like housing or groceries. These costs remain constant regardless of vehicle use, making rideshare options like Uber a valuable source of additional income to manage the increased financial burden.
In 2024, energy prices continued to decline from their 2022 peak, pushing down gas prices and lowering the cost of driving. Replacing energy, the top drivers of inflation in 2024 were expenses like housing and groceries. Among transportation costs, personal auto insurance has become the largest contributor to inflation, making car ownership more expensive for all drivers on the road.
Against this backdrop, many drivers turned to the platform as a flexible way to earn supplemental income. For some, it’s a way to cover an unexpected expense; for others, it’s a consistent strategy to navigate rising living costs. With its flexibility and low barriers to entry, Uber enables drivers to earn on their own terms and adapt to changing personal circumstances and economic conditions. There are lots of tools built right into the Uber app to help drivers understand their overall earnings and make informed decisions to meet their earnings goals.
Declining energy costs helped lower inflation in 2024 while personal auto insurance became a top contributor
Uber’s goal is to keep access to our services affordable for riders while ensuring high value for drivers — both are necessary for our platform to thrive. The greatest challenge to maintaining this balance today is skyrocketing commercial auto insurance costs. Commercial auto insurance is required for rideshare trips in the United States, and Uber buys coverage on behalf of drivers, to supplement their own personal auto insurance. In some states, the mandatory coverage limits for transportation network companies are many times higher than those required for other vehicles on the road, despite rideshare drivers having a stronger safety record than the average driver and reducing traffic fatalities in the U.S. These disproportionately high requirements have increased Uber’s U.S. Mobility insurance costs by more than 50% per trip over the past three years, leading to higher prices for riders and fewer earning opportunities for drivers.
Uber’s insurance costs have increased alongside industry commercial and personal auto insurance
Looking ahead to 2025, these cost dynamics are expected to continue. The U.S. Energy Information Administration forecasts that fuel prices will decline for a third consecutive year in 2025. In contrast, both personal and commercial auto insurance rates continue to rise — although at a slower rate — and remain key contributors to transportation costs and overall inflation. To mitigate this impact, Uber is leading advocacy efforts nationwide to pass commonsense legislative changes aimed at reducing escalating insurance costs. We are also exploring ways to bring costs down by rewarding safer driving and supporting drivers who bring their own commercial insurance coverage from traditional transportation businesses. By prioritizing cost efficiencies for both drivers and riders, Uber ensures a well-functioning marketplace that serves millions. As we navigate changing economic conditions, this principle will continue to guide our efforts to deliver value for everyone who depends on Uber.