A Decade-Long Uber Strategy Comes to an End

'Investor-fueled subsidy' is going away, and prices will likely rise, per Slate analysis
By John Johnson,  Newser Staff
Posted May 23, 2022 6:25 PM CDT
A Decade-Long Uber Strategy Comes to an End
Are the days of cheap rides over?   (AP Photo/Gene J. Puskar, File)

(Newser) – Those who use Uber and its rivals should prepare to open their wallets even wider, writes Henry Grabar in an assessment for Slate. The headline pretty much sums things up: "The Decade of Cheap Rides Is Over." Uber has been content to lose a lot of money since it came along in 2009 in its quest to hook riders on its service. Lyft has done much the same, and "this has amounted to an enormous, investor-fueled subsidy of America’s ride-hailing habit," writes Grabar. But as a company memo from Uber CEO Dara Khosrowshahi last week makes clear, Uber is shifting strategy to make sure its "economics work" going forward. Meaning, the days of burning money via that "subsidy" are over.

"How Uber rights the ship is not for me to figure out, but one obvious answer is that rides have been getting—and will continue to get—more expensive," writes Grabar. He cites one study showing a 92% spike in Uber prices between 2018 and 2021, and notes that Uber and Lyft have been asking people to shell out an extra surcharge because of high gas prices. "And all that was before last week’s ultimatum." The piece looks at the broader effect the "subsidy" strategy has had on the economy, including how it made the landscape inhospitable to car-sharing (as opposed to ride-hailing) companies such as Zipcar. It also may have discouraged cities from investing in public transportation, which might prove unwise if higher fares send people back to buses. (Read the full piece.)

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