Uber has decided to focus on bikes and scooters, prioritising them ahead of their cars. Despite the chance of short-term losses, Uber predict that their decision will pay off in the long run.
In January 2018, Uber partnered with JUMP, a company known for their dockless electric powered bikes, before acquiring the bike-sharing company in April 2018 for an undisclosed amount of money.
More recently, in July 2018, Uber invested in Lime, a city scooter hire company. Lime provides scooters and bikes for people to rent via an app on their phone.
In an interview with the Financial Times, Uber boss Dara Khosrowshahi shared his reasoning behind the shift in priorities. “During rush hour, it is very inefficient for a one-tonne hulk of metal to take one person 10 blocks,” he said.
The aim is to promote a better inner-city environment. The difference in profits between the cars and bikes will be cancelled out by the fact that there will be more people making the trips in the inner-city area, Khosrowshahi predicts.
"Short-term financially, maybe it's not a win for us, but strategically long-term we think that is exactly where we want to head.”
"We are willing to trade off short-term per-unit economics for long-term higher engagement,” he explained.
A blow for Uber drivers
The initial effect of Uber’s lane-change will be felt by the Uber drivers, many of whom earn their living by driving customers around in the city. Khosrowshahi has admitted that there is a risk that drivers will lose out, but that there are gains to be had for them in the future. Khosrowshahi means that the drivers could benefit from more profitable journeys that cover a longer distance.
Choosing bikes over cars will win Uber a lot of points for its environmentally friendly standpoint. A company’s carbon footprint is seen by some as a deal-breaking factor, and many companies are clamouring over each other to appear green, in an attempt to win over those who are critical.
There has been growing opposition to the rise in bike sharing and scooter hire. Cities are seeing an excess of bikes and scooters being left strewn about the streets. San Francisco banned electric dockless scooters from the city in June 2018, and companies were forced to apply for a one-year permit to have their scooters on the streets again. On 30th August 2018, the San Francisco Municipal Transportation Agency (SFMTA) announced that only two electric scooter providers had been deemed worthy of a permit. Lime was not one of them.
Some of the decisions Uber have made can appear counter-productive, such as when they launched uberPOOL, a carpool service. Sharing cars meant cheaper rides for passengers and initially less profit for Uber. However, the idea attracted more customers and this balanced out the losses, much in the way that Khosrowshahi predicts that the bike and scooter business will.
Uber had a tough 2017, and 2018 seems to be the year to bring about change.
“We see the Uber app as moving from just being about car sharing and car-hailing to really helping the consumer get from A to B in the most affordable, most dependable, most convenient way,” Khosrowshahi said to Tech Crunch. “And we think e-bikes are just a spectacularly great product.”
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