What’s Wrong with the Uber and Lyft Model?
In some circles, the very idea that there’s something less than perfect with Uber and Lyft is met with disbelief and even anger. For years, conventional wisdom in Silicon Valley has been that ridesharing (or rather, ride-hailing) is going to revolutionize mobility for the better by reducing car ownership. This will eventually lead to less congestion and lower greenhouse gas emissions. Or so the thinking goes.
However, after years of ridesharing apps, there is good cause to doubt this rosy account. Here are three major reasons why the Uber and Lyft mobility model is making transportation worse.
1. Uber and Lyft are increasing congestion
Proponents of ridesharing apps used to argue that they would reduce overall congestion. But studies have demonstrated that it hasn’t worked out that way. Most people who use ridesharing apps would have otherwise used other forms of transportation (such as walking, biking, and public transportation). So ridesharing is actually adding more cars to the streets, therefore worsening the congestion problem.
Ridesharing has contributed to a 180% increase in urban traffic at some locations.
About 70% of all Uber and Lyft trips in the U.S. are in the nine largest metropolitan areas. The riders in these cities do have public transportation options available, but are choosing Uber and Lyft for the convenience factor. Unfortunately, in the long run, that’s not really serving transportation systems. Ridesharing has contributed to a 180% increase in urban traffic at some locations. That has all sorts of negative effects for our infrastructure and the environment.
More and more cities are becoming aware of this problem and have voted to implement new taxes on ridesharing. This includes Washington D.C. and New York, and it’s likely that other major American cities will follow suit.
2. Ridesharing companies ignored cities for far too long — and now show questionable profitability
For all of the talk about how ridesharing is going to make the world better, that was never a major goal behind the development of Uber and Lyft. In reality, the companies’ primary purpose has always been to make money. Everything else takes a backseat.
The primary purpose of ridesharing is revenue. Even so, they haven’t yet demonstrated the ability to remain financially sustainable in the long term.
Indeed, both companies have brought in massive revenues. But they’ve spent even more. Uber is not yet profitable, and experts are not sure if the company ever can be. Although it’s possible that Lyft will be profitable this year, it’s very far from a sure thing. And if the company wants to continue to grow profits, Lyft will have to enter new markets (and invest more money). That points to a fundamental problem in the model, and there are reasons to doubt the companies’ long-term financial stability.
The primary purpose of ridesharing is revenue. Even so, they haven’t yet demonstrated the ability to remain financially sustainable in the long term.
3. Uber and Lyft ultimately serve one stakeholder, at the expense of others
Do some people benefit from ridesharing? Sure — but they represent only one slice of the population. Generally, the people who see benefits from Uber and Lyft are young, tech-savvy, and have enough income to afford the services.
Uber and Lyft aren’t universally accessible. People who cannot afford to use the services and many people with disabilities can’t get rides at all.
But a lot of people lose out in this equation. Older people, lower-income people, and cities themselves are experiencing the ill effects of ridesharing without seeing any of the benefits.
Uber and Lyft aren’t universally accessible. People who cannot afford to use the services and many people with disabilities can’t get rides at all. It’s unlikely that companies can solve this problem, or even have any interest in serving these consumers.
The best transportation solutions work for everyone, not just one class of people. So far, Uber and Lyft have failed in that regard. We need to do better.
This story is published in The Startup, Medium’s largest entrepreneurship publication followed by + 378,529 people.
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