Uber CEO To Place Bet On Last Mile Transit

Morning Report: Uber’s CEO likes scooters and bikes.

Uber CEO Dara Khosrowshahi told the Financial Times that a shift to focus on bikes and scooters is in the (unprofitable) company’s future. Citing the ability for bikes and scooters to potentially reduce traffic in the long run, Khosrowshahi said that while focusing on smaller, individual vehicles may not be “a win” in Uber’s short-term financial future, he believes last-mile vehicles are a good, strategic bet in the long-term.

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Uber joined the bikesharing race in April 2018 through its acquisition of Jump Bikes, a company that has developed dockless electric bikes. While the bikes aren’t completely free standing—customers must lock the bikes onto public racks—they provide a more flexible option than the dock-based options like Ford Gobike or Citi Bike in San Francisco and New York. Uber also entered into a partnership with Lime and participated in the company’s $335 million financing round in July. The round valued Lime at $1.1 billion.

Though funding has followed the scooters and bikes down the road, city support has not. Citing public safety and congestion, the city government of San Francisco banned scooters beginning in June, requiring companies to remove all vehicles from the streets pending permitted approval. Meanwhile, China-based ofo and Mobike have also hit some bumps in the road in the U.S.

In July, ofo announced that it laid off the majority of its U.S. workforce and pulled out of multiple markets in the region. The company cited “obstacles to new, green transit solutions” in U.S. markets, which it says limit its ability to prioritize growth. One of those notable cities was Dallas, which had been experiencing the negative side effects of hosting a bikesharing competition on its streets.

Given the narrowing of the space, the elimination of competitors in key markets could present an opportunity for Uber (and Lime) to solidify its hold on the scooter and dockless bike market. The company is betting that regularity of use will offset the considerably lower revenue that it makes from a bike ride as compared to a car ride. Scalable growth in the industry, however, will likely have to be met with the restraint and consideration of government interests.

Illustration Credit: Li Anne Dias