Uber may be crushing it in the ride-sharing sector, with revenues over twice that of Lyft’s, but the latter is hardly backing down.
On Thursday the on-demand transportation service announced an expansion in over 50 American cities – just one month after the company launched in 40 new communities. This week’s expansion is happening nationwide, though the bulk of these new cities and towns are in the Midwest and Northeast.
Lyft’s aggressive expansion comes at a time when Uber keeps finding itself in the midst of public relations stumbles.
First, the company appeared to to advertise its services out of New York’s JFK International Airport while transportation unions urged a general strike in protest of the Donald Trump administration’s travel ban. The company apologized, but “app-tivism” caught on as #DeleteUber trended all over social media. And last weekend accusations of sexual harassment in the workplace ended up making headlines, embarrassing the company for several days.
On the revenue front, Uber’s financial losses during 2016 appeared to fade in the background, only for the company to make news again with assertions that it is avoiding the payment of taxes in the United Kingdom.
Lyft is also a big money-loser, but the company is bullish on its future as it debuts in small cities such as Manhattan, Kansas, and Janesville, Wisconsin. This week’s announcement boosts Lyft’s presence in at least 300 U.S. cities. That’s still far behind Uber, which claims 560 cities worldwide, but Lyft’s growth could not come at a more prescient time for the company.
Lyft broadened its reach as some analysts are beginning to see ride-sharing companies as more of a killer of public transportation than a complement. Some of Lyft’s new cities, such as Worcester, Massachusetts, are cutting budgets and bus routes as competition from Uber and Lyft add to woes already stemming from cheap gasoline and the proliferation of sub-prime automobile loans.
Furthermore, the industry is becoming even more crowded as Google plans to make a push into the space with its pilot launch of ride-sharing on Waze in several American and Latin American cities. Alternatives such as Juno and Gett are also holding their own as more consumers avoid what they see as the dubious practices of both Uber and Lyft.
And while many locals will hail the arrival of Lyft, regulators are not necessarily thrilled. As Lyft drivers revved up their cars in cities and college towns across Iowa yesterday, the state’s transportation department suggested the company may be operating illegally — claiming Lyft was not yet legally registered and licensed within the Hawkeye State.
Last year, the Iowa Legislature passed a law establish rules for ride-sharing companies, which include proof of liability insurance and criminal background checks for drivers – requirements to which Lyft and Uber have objected in the past, resulting in backlash that even sparked a vote to kick the companies out of Austin, Texas, last year.
Nevertheless, Americans’ desire to make extra cash, paired with commuters’ desire to have a backup transportation plan for the office or a night out on the town – or just eschew car ownership all together, still make ride-sharing companies an attractive prospect to investors.
Yesterday on CNN, Lyft’s co-founder and CEO John Zimmer expressed optimism that the company will soon become profitable. “$2 trillion are spent every year on car ownership, and it’s really inefficient,” he told the news network yesterday. “Cars are only used 4 percent of the time, so the whole industry is growing.”
Image credit: nrkbeta/Flickr