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  • If you've taken an Uber or Lyft recently, have you noticed anything different?

  • Prices. You know, Jim, and I mean, we've all experienced this lately.

  • There seems to be a bit of a shortage of drivers.

  • Right. And the prices are exorbitant.

  • The cost of a ride from a ride sharing app like Uber or Lyft increased 92 percent between January

  • of 2018 and July of 2021.

  • Many riders also noticed increased wait times for rides.

  • So what's behind this change?

  • To us, the big issue is just that the drivers supply remains fairly constrained.

  • In early July 2021, Uber and Lyft drivers were about 40 percent below capacity.

  • The companies have taken notice and are investing millions worth of bonuses and base rates to convince

  • drivers to return.

  • While the companies have been spending a ton of money to incentivize drivers to get back on the platform,

  • you've talked to a lot of drivers that say it's not really trickling through.

  • Uber is still considered an unprofitable company, and Lyft just recently reached the status of profitable

  • when considering its adjusted EBITDA.

  • Profitability was a problem for these companies even before the pandemic, calling into question the

  • effectiveness of their business models.

  • It's hard to see how these companies become profitable, but the CEOs have promised that they would

  • reach that measure adjusted EBITDA profitability within the next few quarters, and Lyft actually did

  • achieve that. The question is, if they can sustain it.

  • To turn things around, these ridesharing companies might need to do even more to convince drivers to

  • return.

  • I would say the companies don't really look at us as human beings and they just consider us profit.

  • The pandemic hit almost every industry hard.

  • Uber and Lyft were no exception to that.

  • Ben Valdez, a driver and member of the group Rideshare Drivers United remembers what it was like in the

  • beginning of the pandemic.

  • Because everything was shutting down in the very beginning around March, the demand went down

  • drastically. And I'm talking, you know, I used to typically average anywhere between 100 and 150 dollars

  • a night. Once everything started to slow down, I was making...

  • I think it was around 85 dollars for 12 hours.

  • So at that point, I said, you know what, I'm going to take a break.

  • And a lot of other drivers took the same way out.

  • First, for the ride share, obviously, the decrease in mobility was a shock to a lot of the drivers that

  • require this for their incomes.

  • Right, and it was airport rides, commutes to work, it was just general mobility.

  • And so I think kind of the sudden drop off in demand.

  • And then you add to that once demand started to build back, this idea that, you know, was it safe for the

  • drivers to be driving around passengers?

  • I think it was an anxiety around that as well.

  • In fact, many drivers switched to food delivery.

  • I was making the IV drive like a 150, 200 miles a day to make like 100, 120 bucks.

  • And then I got turned on to InstaCart and DoorDash, Amazon Flex, and I was driving

  • like a quarter of the miles and I was like making 200 bucks a day easy.

  • It was a bit like a gold rush for drivers who were not able to deliver passengers during the pandemic.

  • While Uber is ride sharing revenue decreased 43 percent between 2019 and 2020, its

  • delivery revenue increased 179 percent.

  • There are investors and there are Wall Street analysts who have said that Lyft and Uber are, you know, these

  • great reopening plays and that Uber is hedged because it now has this food delivery business plus ride

  • sharing. So if the economy opens back up, it's well positioned.

  • If we see the rise of the Delta variant than its food delivery business would be well positioned.

  • We win both ways and we stay relevant to the consumer, whether they want things delivered to their

  • home or whether they want to go out, whether it's to a party or to a restaurant or to work.

  • Ride-share drivers are still the bread and butter for these companies.

  • Uber may have seen a steep increase in delivery revenue in 2020, but mobility, the term Uber uses

  • for its ride share business earned quite a bit more than its delivery business in the same year.

  • Uber said that it was spending, I believe, 200 million dollars on driver incentives.

  • And you really saw that hurt their core business in terms of that adjusted EBITDA profitability and their

  • latest results.

  • They lost far more money than Wall Street was expecting.

  • We're investing so that our consumer and our rider experience is better.

  • And we can actually bring some of those rider prices down as supply shifts and balances out.

  • Uber's website says drivers make anywhere between 22 dollars an hour in cities like Orlando to

  • 37 dollars an hour in cities like New York.

  • Lyft has a long list of incentives and bonuses for drivers.

  • The minimum driver incomes was to us a very good barometer to try to understand how aggressively they're

  • trying to woo drivers back.

  • Right, and there's a host of other incentives that they use for drivers.

  • They'll give a driver a bonus for running in a specific area.

  • They'll call it a hot zone.

  • Right, they'll say you do an incremental ride you get this extra bonus.

  • But to us, the minimum income was a nice way to kind of encapsulate all of that was happening into one

  • number.

  • But for those who are still making a living, or at least trying to, from ride sharing platforms, the

  • companies are not offering enough.

  • Look at how they treat us.

  • Don't be scared, guys. We pay your salaries, you ********. You know we're all drivers, right?

  • You know we're all drivers, right?

  • 60 cents a mile, driving around, it's not an adequate rate.

  • You know, at a dollar to a dollar fifty per mile, I would say, you know, people would be content.

  • There are some transparency issues as well in terms of how much drivers are actually earning and in which

  • markets and where there is that imbalance.

  • It's hard to say exactly how much an Uber or Lyft driver makes sense the amount would be different

  • depending on the location, ride frequency and other factors.

  • There is a base pay for drivers that differs from city to city.

  • The full rate is calculated from the distance of the ride and the amount of time the ride took.

  • Uber and Lyft both take their cut of this calculation .

  • In the second quarter of 2021, Uber take rate for rides was about 19 percent.

  • But some drivers are saying that's not what they see.

  • So they started taking the bulk of the fare.

  • And so that's how Lyft has now achieved profitability off the backs of the drivers.

  • Drivers do get to keep tips and bonuses, but to some drivers, the bonuses can feel too much like a game.

  • An example would be right now during the peak hours, they are offering anywhere between 15 and 18 dollars

  • for every three rides that you take.

  • The problem is, is because there's such a shortage on drivers, you now have to drive 20 minutes to go pick

  • somebody up and potentially make 3 to 4 dollars.

  • And so, you know, a lot of these incentives are games and they're just designed to keep people

  • thinking that they're making money off of it.

  • The driver shortage calls into question the ride share business model and whether it's a sustainable one.

  • A lot of these companies, the playbook was the same: spend big, grow fast, pay people as little as you

  • can and expand your service, knock competitors out of the market, establish market dominance and then

  • raise your prices. And now we are seeing the last phase of that strategy.

  • And now those competitors, in many cases, they didn't make it.

  • New York City lost over 10,000 yellow cab drivers from January 2015 to January

  • 2020 before the pandemic when Uber and Lyft were both rapidly growing.

  • Back then, ride-share companies were subsidizing the price of rides with promotions, discounts and even just

  • lowering the cost of rides to bring in new customers.

  • It was a heavily promotional environment, and part of that was to try to drive market share, was to try to

  • drive people to test, right, and to understand how these products work.

  • To me, it's not dissimilar than getting a taste of something at Costco.

  • Right, I mean, you try it and then hopefully if you like it, you become a customer for life.

  • And it was a cost associated with that sample.

  • So the capital raised by these companies in part went to making rides more affordable and making sure

  • drivers were happy with their compensation.

  • But now that Lyft and Uber are public companies, they have to worry more about making a profit.

  • You can't compete as a regular business with a startup that is, you know, is basically

  • paying dollars for dimes.

  • And so a lot of these competitors have gone out of the market now.

  • And so there isn't really a lot of choice left.

  • You have to pay the increased fees or just give up on the service altogether.

  • And some investors are anxious to hear what solutions Uber and Lyft come up with.

  • I mean, it's a key part of the business, right?

  • This is a platform that relies on connecting drivers with riders.

  • So there is no business if there isn't any drivers.

  • You know, what's interesting is there does seem to be a little bit of a battle between the two companies.

  • And so, you know, you can get into a geography and turn on your Uber app and not see any cars and turn

  • left and see a ton of cars and vice versa.

  • So I think there is still this very competitive and liquid market for these drivers that over time should

  • normalize.

  • Uber declined to comment for this story, but did provide CNBC with some of the information in this

  • story. And Lyft said we've added thousands of drivers to the platform and expect rider wait times and

  • prices to improve moving forward.

  • Both Uber and Lyft know how important drivers are to their businesses

  • We're increasing incentives for drivers to get back out on the road.

  • Drivers are earning more per hour and typically some markets there at all time highs between

  • thirty five dollars and forty dollars in top markets.

  • The question is, will they be able to make amends with the driver community who even before the pandemic were

  • disgruntled with the companies and convince them to come back?

  • Over time, we'll see some of that balance out where I think you're going to see drivers that are going to do

  • combinations of things; they might do ride share, they might do food, they might do package delivery.

  • You know, there are ways that I think the ride-share companies have figured out that putting more volumes to

  • the network, right, having different types of volume, right, and particularly packages can help better

  • optimize kind of the economics for both the driver as well as for the ride-share company.

  • There's so many help wanted signs.

  • And yet there's this tremendous mismatch between what the help wanted and what people want to do.

  • And to get drivers, they're going to have to pay them more.

If you've taken an Uber or Lyft recently, have you noticed anything different?

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Why Uber And Lyft Rides Got So Expensive

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    joey joey に公開 2021 年 09 月 18 日
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