Uber said in a statement that the company is going to focus more on its electric scooter and bike business rather than cars despite affecting profits.
Uber CEO Dara Khosrowshahi said that the mode of individual transport within the city travel is better suited. He also deciphered that people would make more frequent and shorter travels in the future during rush hours, it becomes impractical to take one person 10 blocks down in a huge car, he said while talking to Financial Times.
While commenting on the company’s profit and financial impact of the change he said, short-term financial could be hurt with this change but in the long-run and considering the strategic direction that is what where we need to head.
The ride-hailing company has invested in a range of electric scooter firms during last year including Jump and Lime, the company is now offering its Jump electric bikes in eight cities in the US including Washington D.C., and New York along with plans to launch in Berlin.
The CEO said, Uber makes less money with bikes than it makes with cars, but the fact is users tend to use the app for shorter and more frequent journeys. “We are willing to trade-off short-term per unit economics for the long-term higher engagement”, he told FT
He said, Uber drives would also be affected by the plan, but with the time being they will be benefitted from longer and lucrative journeys.
Uber under pressure
This is also evident that Uber has been under immense pressure for the last few years, and it becomes inevitable for the company to change its business model where there is less pressure on it. Uber has lost $4.5 billion last year; the company is not under pressure to improve its financial position ahead of its public listing.
Despite its rising profits from taxi business, the company is incurring losses due to the cost of expansion in other regions, bike sharing and food delivery services, the regulatory pressure is also mounting in various markets. New York has voted to impose a temporary cap on new licenses for ride-sharing vehicles in order to tackle congestion, London is also focused on imposing similar restrictions.