Uber announced that they would focus on the electric scooter and bike business instead of cars, even if the shift could hurt their profits.
Uber CEO Dara Khosrowshahi stated that these modes of transport would be perfect for traveling in the city, and firmly believes that users would prefer to make frequent short journeys with a scooter or an electric bike:
“During rush hour, it is very inefficient for a one-tonne hulk of metal to take one person 10 blocks,” stated Mr. Khosrowshahi in an interview with the Financial Times.
He knows that they will lose some profits, but thinks that “it’s not a win for us, but strategically long term we think that is exactly where we want to head.”
In the last year, Uber has invested in many bike firms. They now have Jump electric bikes in eight US cities – such as New York, Washington. Berlin will also see these bikes soon.
Another firm is Lime, which is an electric scooter company.
Mr. Khosrowshahi knows that a bike ride will yield less money than a car ride, but using the app; customers can frequently engage in short journeys:
“We are willing to trade off short-term per-unit economics for long-term higher engagement.”
What About Uber Drivers?
As for Uber drivers, the CEO acknowledged that it could hurt them, but it will also help them they have longer journeys which are more lucrative.
Last year Uber lost $4.5bn and is now trying to improve their finances. Even though the taxi business enhanced the profits, the expansion into these new areas like bike sharing or food delivery resulted in more losses.
Some markets are also threatened by regulations: New York voted this month for a temporary cap on new licenses for vehicles used as taxis to decrease congestion, and the mayor of London intends to impose a similar restriction.
Doris’s passion for writing started to take shape in college where she was editor-in-chief of the college newspaper. Even though she ended up working in IT for more than 7 years, she’s now back to what he always enjoyed doing. With a true passion for technology, Doris mostly covers tech-related topics.