A lot of interesting news in this week’s roundup, including serious competition from Tesla for Uber and Lyft, seriously bad numbers for the future of rideshare profitability, and passengers are finally being removed from the platform – but not for what you might expect. This news and more from senior RSG contributor John Ince below.
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Uber and Lyft Could Gain From U.S. Rule Defining Employment [NYTimes]
Sum and Substance: The Labor Department proposal would most likely treat drivers and other gig workers as contractors, not employees….
The Labor Department on Tuesday announced a proposal that could deem millions of janitors, construction workers and gig workers to be contractors rather than employees, its most ambitious step toward blessing the business practices of companies like Uber and Lyft.
Unlike employers, companies that rely on contractors don’t have to pay a minimum wage, overtime or a share of Social Security taxes, or contribute to unemployment insurance and provide workers’ compensation insurance.
The proposal is a so-called interpretive rule, not a regulation that has the force of law. But it could have significant influence were it to be finalized.
My Take: This is something. It’s not the rule of law, but it does carry influence – and influence judges who would give it the rule of law. Note: it applies only to Labor Dept regulations.
California Ballot Measure That Exempts Uber, Lyft From Employing Drivers Lacks Needed Support, Poll Shows [Forbes]
Sum and Substance:A ballot measure in California backed by Uber, Lyft and other app-based gig companies that would allow the firms to once again classify their workers as independent contractors may come up short in the upcoming elections, a new statewide poll in California has found….
The poll conducted by the UC Berkeley Institute of Governmental Studies which surveyed 5,900 people found that 39% of voters are likely to vote yes on ballot measure Proposition 22, which is backed by the companies, while 36% say they would vote no and 25% are still undecided, the Los Angeles Times reported.
The ballot measure needs to receive more than 50% votes in its favor to pass…
My Take: This isn’t a bad poll for Uber, Lyft etc. It’s actually 39%-36% in their favor, so all they’ve got to do is expand their numbers. Whether we want that outcome is another question.
Uber and Lyft Sales Will Plummet Before Rebounding in 2021 [eMarketer]
Sum and Substance: We expect Uber’s ride-sharing sales in the US to decline by 39.8% this year to $17.39 billion (down from $28.88 billion in 2019). Lyft’s sales will decline by 25.0% to $8.97 billion (down from $11.95 billion last year)….
We estimate that the number of Uber users in the US will drop by 28.3% this year, down by 15.2 million from 2019, and the number of Lyft users will drop by 32.3%, down by 10.3 million from last year….
The total number of transportation-sharing economy users should rebound to 71.3 million next year, after falling to 51.3 million this year. We also forecast an enormous 70.2% growth rate for Uber’s sales in 2021 and a 44.1% growth rate for Lyft’s sales. Note, however, that if Proposition 22 fails in California in November, both companies will likely see more modest rebounds for their user figures and sales. …
My Take: These are just projections, mind you, but they’re pretty devastating. Uber promised profitability at the end of 2021… before the pandemic …
Could A Tesla Ride-Hailing Network Run Over Uber And Lyft? [Seeking Alpha]
Sum and Substance: Elon Musk has said that, before launching an autonomous driving network, Tesla could debut a ride-hailing service with drivers, for good strategic reasons.
In addition to AI training data, we believe a human-driven network would give Tesla four more competitive advantages relative to other ride-hailing players: Lower operating expenses, more efficient financing and insurance, higher trade-in or residual values, and premium prices. …
According to ARK’s research, the cost to drive a Model 3 is roughly 30% less than that of a Toyota Camry, as shown below. In other words, both Tesla and its ride-hailing drivers could benefit from operating costs lower than those at Uber and Lyft. …
My Take: 30% on expenses is a pretty big incline to overcome. Combine that with data collection and you’ve got a real incentive for Tesla to do something. No wonder Uber and Lyf are making so much noise about electric cars in their fleet.
Uber is officially getting into the office carpooling business [Quartz]
Sum and Substance: The traditional UberPool—in which individuals are randomly matched to cars with strangers going the same way, making the ride cheaper for everyone—was shut off in mid-March, shortly after the World Health Organization recognized Covid-19 as a pandemic. It remains on hold globally. But today (Sept. 22), Uber is launching two new Uber For Business products that will bring back the option in a more controlled format.
My Take: Uber adapts. Carpooling? I suppose so, but I don’t see this as a big money maker.
Uber banned more than 1,250 riders for not adhering to its mask policy, app says [USAToday]
Sum and Substance: Uber has removed more than 1,250 riders from its platform for not adhering to its mask wearing rules, the company says. And it is expanding its tools to identify those who are intentionally defiant moving forward.
The ride hailing giant announced Thursday that it has begun rolling out its Mask Verification feature across the United States and Canada. The feature was first announced earlier this month. And it requires you to take a selfie with a mask on before your next ride if a driver flags you for not wearing a face covering amid the ongoing coronavirus pandemic.
My Take: Uber is serious about this new policy. This action shows just how serious they are. Wear a mask… or no ride!
Readers, what do you think of this week’s roundup?
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-John @ RSG