In a surprise announcement this week, Uber indicated that it will focus its planning and investments on its new electric scooter and bike business instead of on cars. The ride-hailing innovator that has upended traditional taxi services around the world and spurred the rise of several rival companies in America, Europe and Asia says that it will move forward even though the investments might hurt profits.
Uber’s CEO, Dara Khosrowshahi, says it is part of the company’s plan to diversify its offerings by providing more services than merely booking cars.
Khosrowshahi also believes that the growth potential for individual modes of travel is larger in congested inner cities. Scooter rentals are also both cheap and convenient on journeys that are short and frequent.
“It is very inefficient for a one-ton hulk of metal to take one person 10 blocks,” he said to the Financial Times. “Strategically...this is where we want to head.”
The firm has already invested in several bike firms in the past year, including the American-based Jump electric bikes, which currently offers bike rentals in New York, Washington, and six other US cities. Jump plans to expand their operations to Berlin later this year.
Uber has also partnered with Lime, an electric scooter firm, and is exploring other deals with companies involved in public transport and freight.
For Khosrowshahi’s bet to be right, customers will need to be willing to pay for many more trips since rides will be significantly cheaper.
Uber faces pressure as it prepares for a public offering next year but failed to turn a profit last year, posting a $4.5 billion loss instead. Meanwhile, costs in ride sharing and new investments have been rising faster than revenue. This month, New York’s City Council voted to set a temporary cap on new licences for ride-hailing drivers in order to bring down congestion in the city, and Sadiq Khan, London’s major, has promised to seek a similar restriction.