Now That Uber is Public, Will it Mean Lower Rates for Drivers?

Uber is now public. Will driver rates continue to suffer? Here’s a line from their IP disclosure documents: “While we aim to provide an earnings opportunity comparable to that available in retail, wholesale or restaurant services or other similar work, we continue to experience dissatisfaction with our platform from a significant number of drivers. In particular, as we aim to reduce driver incentives to improve our financial performance, we expect driver dissatisfaction will generally increase.”

That doesn’t sound good! Take a look at Joe’s video below to hear more about how a public Uber may affect driver rates and earnings.

Uber needs to continue driver incentives

Not the greatest news for drivers, but if we delve a little bit deeper into the S1, we also see multiple times that they need to continue to offer these incentives in order to grow their business and stay competitive. What is it? Are these incentives going to go away or be reduced, or are they going to stay and be offered more prevalently? What about driver rates? Are they going to play with those rates again? Are they going to lower them?

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In my opinion, they’re going to need to continue to offer these driver incentives to attract, motivate and retain drivers.

Uber already has a high driver turnover rate, and they would exacerbate that situation by reducing these incentives or removing them all together. This S1 is basically explaining their business model and everything about their business. It’s explaining to shareholders that this is what the business looks like currently. They have to offer these driver incentives in order to motivate drivers and stay competitive. That’s what the document is explaining. It’s basically telling investors that if they want to turn a profit, they might have to get rid of these driver incentives, but that in turn might spike an increased driver dissatisfaction.

Uber admits that driver dissatisfaction is high, and could climb higher

They’re also saying in that document that drivers are already dissatisfied, so they’re saying drivers are currently dissatisfied, and if we remove those incentives, they’ll be even more dissatisfied. Like I said, again, this could really exacerbate the driver turnover rate. As far as rates, I can’t see them directly lowering driver rates. Again, I could see them playing with the rates, playing with the per mile per minute rates.

We see there’s a huge disconnect. There can be a huge disconnect from what the driver gets paid and what the passenger is paying.

I don’t think Uber will significantly drop rates

Uber might continue to change the passenger rates. They might spike those and driver rates will stay flat lined at what they are. We’ve had videos where we’ve explained upfront pricing, how Uber may charge the passenger, what they think they’ll pay as opposed to what the per mile per minute rates should actually be for that ride. That disconnect may grow wider now that Uber is going to be a publicly traded company, but I don’t see them lowering driver rates again.

Here’s my take on Uber and Lyft getting to a level of profitability. Uber currently loses billions per year, and that’s because they’re subsidizing a lot of these rides. They’re offering a lot of driver incentives. As long as drivers are a part of the business model, Uber is not going to be profitable. That’s just my opinion. They are looking to a future of autonomous vehicles. That’s where they see the real money being made, and that is still years off. It’s not going to happen anytime soon.

Until autonomous vehicles come out, Uber needs us

In the meantime, they need to try and build a network. They want to try build this network so that when autonomous does happen, they have a huge network of cars. They have a lot of reliability and service so that they can turn key that. Once those autonomous cars are there, people can rely on that service, us drivers are still going to need to be paid fairly.

We’re still going to need to be offered incentives in order to motivate and retain drivers. One positive note that you probably all are aware of by now are that Uber is offering those cash bonuses similar to what Lyft offered when they went public.

What do you guys think? Any takes that we may have missed? Leave a comment below and let us know. Thanks again for watching!

 

 

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