An Affordable Uber, But For How Long?

A glimpse at Uber's financials show's that the car-hailing app's days of affordability may be shorter than some are expecting

1 minute read

December 14, 2016, 10:00 AM PST

By jwilliams @jwillia22


Uber Lyft Departure

Paul Sableman / Flickr

With Uber's rise in popularity it has gained a foothold as an alternate to mass transit for some, pushing out competitors such as Lyft in some markets with hard to beat prices. The Financial Times Alphaville blog takes a closer look at recently released financial data from the company, which shows a substantial subsidy of $2 billion from investors is helping to keep Uber's prices low. As noted in the report, Uber passengers are only paying 41 percent of the actual cost of their trips. Izabella Kaminska of Alphaville writes:

Silicon Valley elites justify the subsidies in the name of monopolistic growth expectations and the building of “eco-systems”*. They believe if monopoly status is achieved, profitability will follow naturally from that point.

Yet, as FT Alphaville has long maintained, there is no reason to assume Uber’s obliteration of local competition across the planet will create a sustainable business in the long term. Costs are costs, even if you’re a monopoly. As long as people have cheaper alternatives (public transport, legs), they will defect if the break-even price is higher than their inconvenience tolerance threshold.

Kaminska notes that the poor returns for the car-hailing aspect of Uber's business model may be why it is now "pivoting its way to viability" with expanded offerings, including Uber Eats.

Thursday, December 1, 2016 in Financial Times - Alphaville

portrait of professional woman

I love the variety of courses, many practical, and all richly illustrated. They have inspired many ideas that I've applied in practice, and in my own teaching. Mary G., Urban Planner

I love the variety of courses, many practical, and all richly illustrated. They have inspired many ideas that I've applied in practice, and in my own teaching.

Mary G., Urban Planner

Get top-rated, practical training

Close-up of "Apartment for rent" sign in red text on black background in front of blurred building

Trump Administration Could Effectively End Housing Voucher Program

Federal officials are eyeing major cuts to the Section 8 program that helps millions of low-income households pay rent.

April 21, 2025 - Housing Wire

Logo for Planetizen Federal Action Tracker with black and white image of U.S. Capitol with water ripple overlay.

Planetizen Federal Action Tracker

A weekly monitor of how Trump’s orders and actions are impacting planners and planning in America.

April 30, 2025 - Diana Ionescu

Close-up on Canadian flag with Canada Parliament building blurred in background.

Canada vs. Kamala: Whose Liberal Housing Platform Comes Out on Top?

As Canada votes for a new Prime Minister, what can America learn from the leading liberal candidate of its neighbor to the north?

April 28, 2025 - Benjamin Schneider

Washington

Washington State’s Parking Reform Law Could Unlock ‘Countless’ Acres for New Housing

A law that limits how much parking cities can require for residential amd commercial developments could lead to a construction boom.

55 seconds ago - Streetsblog USA

Bluebird sitting on branch of green bush.

Wildlife Rebounds After the Eaton Fire

Following the devastation of the Eaton Fire, the return of wildlife and the regrowth of native plants are offering powerful signs of resilience and renewal.

1 hour ago - AP News

1984 Olympics

LA to Replace Inglewood Light Rail Project With Bus Shuttles

LA Metro says the change is in response to community engagement and that the new design will be ready before the 2028 Olympic Games.

2 hours ago - Newsweek

Urban Design for Planners 1: Software Tools

This six-course series explores essential urban design concepts using open source software and equips planners with the tools they need to participate fully in the urban design process.

Planning for Universal Design

Learn the tools for implementing Universal Design in planning regulations.