Lyft and Uber’s IPOs aren’t doing well. With both companies experiencing strikes, and the indication of new competition from Tesla, it’s understandable that the stock prices are plummeting. But what does this mean for the drivers who rely upon Lyft and Uber for their income?
Lyft and Uber Drivers Strike for Higher Pay
The last week saw both Lyft and Uber drivers striking for higher pay. While the strike didn’t seem to have widespread ramifications in itself, it sends a strong message: Lyft and Uber drivers are not satisfied with their diminishing returns. Of course, this puts Lyft and Uber in the position of having to maintain their market share while bleeding money.
Both Lyft and Uber have been expanding their markets by essentially subsidizing the cost of rides. They expanded into new markets and paid high rates, then cut those rates once drivers became accustomed to the income. This was necessary because presently neither Lyft nor Uber are profitable.
Instead, the end goal for both Lyft and Uber was to create a market based around “real drivers” and then substitute those drivers for automated driving technology, something that Elon Musk has stated he’s already planning on doing himself.
How Automated Technology Could Change the Game
Elon Musk already has self-driving technology. He could launch self-driving automobiles very quickly, and these automobiles would be far cheaper than having to hire drivers. Further, since his cars are all both autonomous and electric, they would be able to be far more efficient.
But that doesn’t mean that regulators will immediately be welcoming of automated taxi services, especially in high value areas such as New York and California. This is what Lyft and Uber were banking on: they thought that developing a network and a market share early on would benefit them once they were able to establish their autonomous technology.
However, Uber hasn’t been able to crack the code of truly autonomous vehicles, and Lyft hasn’t broken out of a few small test markets.
The Ride Share Market Isn’t Over for Drivers
Drivers looking at this picture may wonder whether the ride share boom is over, and whether it’s even worth it to become a driver. In fact, it may actually be a good time to get in. There are two reasons:
- Uber and Lyft are currently hurting for drivers. Many drivers have left because of lower prices, due to the race-to-the-bottom that both Uber and Lyft were attempting.
- Uber and Lyft will likely both need to raise prices. This is good news. Previously both of them were trying to out compete each other for the market, but now, realistically, they have to raise prices, and more money may be going to drivers.
- Uber and Lyft have both invested a significant amount of money into their infrastructure. That’s important because they aren’t likely to abandon their infrastructure now.
- Uber and Lyft haven’t cracked autonomous vehicles. As hard as they’ve been moving towards it, they haven’t been able to do it.
While Elon has stated he wants over a million taxis on the road by the end of the year, it’s simply not realistic. He’s often stated goals that he’s overshot before, and this isn’t likely to be any different. Even if the technology is there, the regulations aren’t likely to be.
Should You Still Driving for Lyft or Uber?
Drivers should avoid trying to make either Lyft or Uber their primary source of income, but that doesn’t mean it’s not still a good market. It may just be a temporary one. In the years to come, we’ll see a new market continue to emerge, and it’s likely that there will be at least some shift to autonomous vehicles.