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What will Happen with Uber and Lyft in 2018

Its sweepstakes time and predictions, forecasts and projections are rampant about the future of Uber and Lyft during 2018. What we do know is that Uber started the year with a major trial against Waymo and that ended yesterday with a deal. This is not the only major issue they are facing this year since Uber has a lot of issues to deal with abroad. We can split Uber into three separate entities, Uber at home, Uber abroad and Uber AV. (Autonomous Vehicle)

Lyft, on the other hand, is a much easier company to dissect; it has only got a US presence with a small Canadian footprint. Other than that, they have been growing steadily, maybe too steadily to make any real waves.

So, let’s start with Uber, and begin with Uber at Home.

Uber car with sticker on windshield

Uber at Home

Legal Issues

Uber’s executives pre-Khosrowshahi were problematic, and that’s an understatement. With their gregarious leader Kalanick, the executives of Uber were more like a group of berserker Vikings out to pillage the world. With so many federal tax issues, sexual harassment, and hidden hacking attacks, it is probable that at least one of the many executives will find themselves in a federal penitentiary sometime soon. I also predict that at least one IRS issue will be resolved in a hefty fine and even a warning to Kalanick.

Market share

While Lyft has been increasing its market share at home, Uber is not under directions from SoftBank to start consolidating their global position by concentrating on their home market. This will lead to Uber increasing incentives and improving the working conditions for their US drivers. It will also lead to a more comprehensive mix of services that Uber offers at home. These services include UberEats, UberFreight and a whole plethora of UberNewthings to be done in 2018.

Uber Eats sign

Streamlining and Efficiency

Uber is preparing for an IPO in 2019. They have stated this as a milestone target, and Khosrowshahi is all set for meeting this target. The recent $1 billion from Softbank will go to help streamline services, and this includes a reduction in employee’s, an overhaul of the operating system including the introduction of KPI’s (Key Performance Indicators) to set metrics for employee performance. Note, this is about employees, not drivers. We expect a serious cut in staffing in the US, which will coincide with their reduction in size in Asia, leading to a more efficient and cheaper operational overhead.

Market Mix

Uber will start to expand their services to many new areas; these will include increasing their logistics delivery services, improving their e-pay systems and to possibly branch out into taxi app services, something that will give them an additional source of TNC income. After all, taxi services using apps like Gett are basically Uber with two hailing systems, the app and the human wave in the street. Once Uber decides to invest in a taxi app system, they will have covered all their bases.

Gotham City PD Uber taxi

photo credit: Rach / Flickr

Uber Abroad

Asia

Uber will lose size in Asia, which is a good thing since it will make it concentrate on becoming profitable instead of just growing and increasing losses as it grows. Softbank is the perpetrator of this, and we see it happen in Japan and Australia. Ola in India is branching into Australia where there is a large percentage of Indian rideshare drivers. Japan has JapanTaxi that will eradicate Uber completely, and JapanTaxi is backed by Softbank. Grab, the Singapore giant is taking over Southeast Asia such as the Philippines, Vietnam, and Indonesia, and yes, Grab is also a SoftBank company. Then Didi in China (Softbank too) is expanding into Central and South America. Going back to Asia, GoJek is a new Indonesian company which will grow and competes locally. Uber will most probably fold up its operations in Asia completely since it has holdings in Didi and Grab, it will most probably come to a deal with Ola and leave India too. While Uber will retain earnings from its Asian investments, it will save on the marketing and operating costs, making its Asian presence a profitable one.

Europe

Uber in Europe is facing stiff regulatory issues, where the EU decided that Uber is a taxi service and London has banned Uber due to the influence of the black taxi cab service there. Uber’s growth in Europe is facing stiff opposition from Estonia’s Taxify. As well as leaving Russia, making a deal with Yandex like the Didi deal in China. We are all waiting to see what will happen in London, but the bottom line is this, drivers in the UK will most probably win their case, and Uber will have to pay basic wages and social payments. This means that Uber UK drivers will become Uber employees by default. London black cabs will win, and Uber will be banned from London, in fact, I expect that London will be like Japan, a rideshare free zone. On the other hand, Uber Eats will continue to gain strength in the UK and in Europe.

Gett

photo credit: Фото Москвы Moscow-Live.ru / Flickr

America

Sure, North America is Uber’s home territory, but central America is now being blocked from them. Didi is now firmly entrenched in Mexico and Brazil. With a company as formidable as Didi operating locally in the South, it will be hard for Uber to make a solid impact there. In fact, if Khosrowshahi has any sense, and he has, he will leave anything south of the Mexican border alone. The only deviance would be in Guatemala, Panama, and Puerto Rico.

Middle East

Uber has a weak presence in Israel, it is suffering and struggling to make a hold. The main issues there is the strong presence of Gett and the fact that the Israeli-Palestinian conflict makes ridesharing a risky business where locals will not want to take a chance riding in a car that could be a threat for kidnapping by Palestinian activists. Uber in Dubai is holding strong but fighting against local Careem. Uber has a strong presence all over the Arabian Peninsula, and apart from Taxify, looks to retain its presence and increase it during 2018. Uber in Egypt will continue to fight Careem, which has a good bike service there. Uber opened a Nile riverboat service that has taken a good grip.

Uber AV

Well, what can I add that hasn’t been hashed by thousands of sources. The AV wars of Waymo Uber opened a lot of information to the public about this issue. Uber and Waymo settled out of court, and Alphabet now owns a small part of Uber.

The AV wars are far from over. This year we will see Uber continuing to invest heavily in the battle for first blood. While the first fully operational AV is far from complete, maybe in 2021, Uber and Lyft are working together to get market dominance, something I doubt will happen.

The AV industry is a trillion-dollar industry, this is obvious from all the major spend that is going on, where companies like GM, Volvo, Tata, and Ford are pouring billions into research and Uber is partnering with car makers, AV researchers and municipalities to test their car. 2018 will be a year of major investment in this branch, and this is because Uber needs to bring a WOW to their IPO. It’s not enough to show how they increase their efficiency and aim for profitability, and IPO still needs a “dream” to make it more attractive, and the AV sector provides this dream.

Uber – Bottom Line

  • Markets: Reduce its global presence, pulling out of Asia and increasing its influence in Africa and the Middle East. It will also improve its performance and place in North America.
  • Operations: Streamline its workforce, reduce operating overheads and increase driver incentives, leading to a closer profitable year.
  • Services: Increasing its marketing mix and introducing new services and technologies to increase income and profitability.
  • AV: Increase spending on AV development and create more partnerships and collaborations.
  • Finance: Strive for an IPO in 2019
Lyft

photo credit: SDOT Photos / Flickr

Lyft

Lyft is an easier company to dissect and project, it only has two areas to look at, the domestic market and the AV scene. Canada is too small and too new to consider, and while 2018 looks like a year for Lyft to increase its presence in Canada, this will not make much of an impact on its performance.

Lyft at home is where the action will be. I expect to see more money spent on improving services, adding LyftEats as a direct competition to UberEats and trying to get into the taxi app service sector to compete directly with Uber and taxi services that still hold a large percentage of the business.

In fact, Lyft will only increase its market share if it adds more services since the age of Uber mistakes is now over. Khosrowshahi is not Kalanick, and Uber with Bozoma Saint John will create a new image that makes Uber as “beautiful” as Lyft. Lyft must add a supply-chain service to complement their current market mix if it wants to grow beyond its current status really.

Lyft will continue to succeed in raising capital for its expansion in Canada as well as its research into AV, however, since Lyft is like Uber’s poor cousin, and now that Uber and Waymo have sorted out their differences. Lyft is going to face a very hard year.

Lyft will reach an IPO by 2019; if it wants one in 2018, it can go for it since it is a more conservative and stable company than Uber and does not have all the legal issues to contend with on the way to an IPO.

Bottom line: Lyft is going to suffer in 2018, it will continue to expand in some areas, but its growth potential is now facing a much more determined and well-founded Uber.

Uber and Lyft logos on windscreen

photo credit: WBUR

Conclusions

As you can see, my article was mainly around Uber, that’s because Uber is a global presence with a very colorful past. It has changed its executive; it has grown up from a surly kid into an intelligent adult. During this time Lyft was acting like a good kid, an average Joe, and unfortunately average never grow into great, it stays average all its life.

Uber is not average, it has never been, and while its wild childhood is now over, it has the experience, the finances, and the leadership to make it one of the worlds richest IPO’s and one of the world’s leading rideshare companies. Lyft will remain as a competitor in the local market; it will retain its size and fluctuate over time. Sure, it’s a great company to invest into, but it will only have a great 2018 if it starts to move out of its comfort zone.

About author

Aman Bhangoo
Aman Bhangoo 1 posts

Aman Bhangoo is the co-founder of RidesharingForum who helps rideshare drivers and riders to find answers to their most pressing questions. With over 3.5 years of experience, Aman brings a vast amount of knowledge, style, and skills to help fellow drivers. He has given over 18,000 rides with Uber and more than 6,800 rides with Lyft. Facebook: https://www.facebook.com/ridesharingforum | Twitter: https://twitter.com/ridesharing4rum

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