The Rideshare Guy

Why Uber's pursuing a driverless model just baffles me. This quote is for 24,000 cars for around $1.4 billion, or around $58,000 per vehicle. Even if we assume 0 financing cost the car would need to earn over $58,000 in its lifetime to be more profitable for Uber to buy one of these than to continue to pay a driver. Current Uber drivers estimate their profit to be around $0.40 per mile[1] which means each driverless vehicle would need to drive about 150,000 miles just to break even.

Let's guess driving that much that takes about 2 years[2]--if you assume a conservative 1 technician per 50 vehicles[3] to maintain these you also have 2% of their salary * 2 years (say another $3K). Throw in another $1000 for tabs etc, $1500 for the labor for a couple hundred car washes[4], $1000+ for losses related to crashes[5], $500 for parts and maintenance[6] and we're easily at another $7K+ in costs that have to come out of Uber's existing share.

[1] https://therideshareguy.com/how-to-calculate-per-mile-earnings-instead-of-per-hour/
(This is for a 43MPG Prius, with ~$0.06/mile of depreciation. I exclude the depreciation for the calculation above, but need to add back in a similar amount for the difference in MPG.)

[2] https://bizfluent.com/info-8446407-many-cab-driver-drive-yearly.html
Estimates of how many miles per year a single taxi gets driven range here from ~40,000 to ~90,000, so 75K/year seems plausible for a fully autonomous vehicle.

[3]…

I work at Uber outside of the rides/eats business and observed many feature releases to adjust the business after AB5.

What I saw released:

- Enabling drivers to see where a rider is going before accepting the trip [0] [2]

- Removed a main penalty for declining rides, “No More 85% Acceptance Rate Requirement For Uber Pro” [2]

- Drivers get set their own fare with a multiplier [1] (the article details screenshots and backend balance rules)

Now every dollar coming in seems to very clearly go from rider to driver.

- removed upfront pricing in California and once again charging riders the precise trip amount based on time and distance. [0] [2]

- A new driver incentive was released too tied to purchasing the service fee at a lower rate [3] (since every dollar is supposed to flow clearly from the price breakdown)

- “Favorite Driver Feature”, so even if they set higher fares, riders will be able to request one of their favorite drivers if they’re nearby [2]

These seemed primarily to try to address the flexibility evaluated by “Prong A” of AB5, however some public experts were concerned it wouldn’t address “Prong B”, which requires the “drivers’ work is outside ‘the usual course of the company’s business,’” [0]. This might have been where the judge focused their ruling.

Other companies didn’t make changes for drivers, “Lyft [also afaik Postmates, and DoorDash] continues to operate as if it’s business as usual.” [0]

[0]…

Which employees?

FTEs that work in the corporate office and have gone through a 25% and an unspecified "performance" reduction in force?

Merging the two companies would result in many redundancies that would be eliminated.

Uber has about 32,000 employees(?! https://stockanalysis.com/stocks/uber/employees/ ). Lyft has about 3000.

I doubt that any M&A of Lyft into Uber would result in Uber being 35,000 employees for long.

For the drivers, many work for both ("But even though Uber is the dominant player among drivers, that doesn’t mean there’s a whole lot of driver loyalty. Nearly 80% of drivers have actually signed up for 2 or more services with Lyft, Postmates, the DoorDash driver sign up bonus, UberEats and Amazon Flex, all siphoning drivers away from Uber." https://therideshareguy.com/uber-driver-survey/ ) and so removing Lyft as an option isn't as impactful to the market. If a given city has the demand for N drivers - it doesn't matter too much if that's split across multiple services or not other than passenger preference.

It probably would impact the cost for passengers since there would be less competition, but that happens in either case of Uber acquiring Lyft or Lyft folding.

I fully admit I may be wrong, though I don't believe I have contradicted myself.

Are Uber drivers running at a loss? Perhaps. At least the analysis I've seen (such as [1]) don't point to that, especially if we assume drivers aren't buying an extra car exclusively for Uber (just wearing it more). The earnings are crap, but then again, the NYT article I linked above mentioned pre-tax income of $19k, which would be around $11/h today. And there more people driving, so the overall effect is positive.

The monopolization effect is worrying, but while it may be naive, I believe it's a short-term concern. Uber has no "moat" - especially as they refuse to actually hire people, hence they can "hop" between apps -, and while some competitors may be in dire straits, others are still popping up (around here, the new one is Cabify).

I don't like Uber; they're dishonest and I'll probably stop using it as soon as new competition arrives. But I think the medium term consequences will be beneficial to both drivers and users, at the expense of middle men.

[1] http://therideshareguy.com/what-are-your-rideshare-expenses/

I'm not sure if it's purposeful, or how long the hole will remain open, but you can see the full paper. Remove the "-Brief". [0]

The paper is fairly open about their methodology, and give access to things like the actual survey being answered, rather than just saying "a survey matching these criteria was used".

Most of their data apparently has come through Harry Campbell [1], and his yearly survey, which has it's own data and methodology out in the open [2].

I'm not remotely qualified to analyse it, but you can see the data from therideshareguy's survey if you're looking to critique the results of this paper. (I've edited this paragraph to try and get less push/offensive. I'm still not happy with it, but the aphasia is kicking my butt. Rest assured, I'm just trying to be helpful, and just wanted to point the direction to discussing the data. Still not happy with this phrasing either.)

[0] http://ceepr.mit.edu/files/papers/2018-005.pdf

[1] https://therideshareguy.com

[2] https://therideshareguy.com/2018SurveyReport

Uber & lyft is really bad at showing how it works because the system is over complicated. The way it looks is they are getting ripped off all of the time and so they don't like it.

http://therideshareguy.com/how-does-uberpool-pricing-work/

Basically they are paid the same way as an UberX ride, by mile and by time, at a lower rate (0.75/mile vs 0.85/mile). But they are also paid for going out of their way to pick up new people in between, which in uberX they are not compensated for. Some math nerd in the company probably calculated it as equivalent using their historical data, said eureka, and made the business case for uberpool.

But that is way too complicated to understand, so natrually people feel like they are ripped off. If they just made it same uberX rate and just told drivers you get paid for distance and time and do not show them anything else, I don't think they will care. To them it's would be another uberX