I've never understood that. How are they subsidizing it? They take over 25% of what the customer pays and all they have to do is run the app. Whether they charge $10 or $15 for the same ride the cost to them is the same. It doesn't make sense, they don't have any extra cost by making a ride cheaper.
I hope this explains it more clearly.
https://www.vice.com/en_us/article/9a3vye/uber-true-cost-uh-...
How about using the S-1 or quarterly filings instead.
Uber also pays driver incentives beyond fares (e.g. for completing a certain number of rides).
They're not losing money on rides.
Uber is two things. A moderately profitable ride sharing company, and a loss-making VC-backed R&D enterprise working on things like self-driving cars. If they shut down or spin off their R&D they could continue on as a ride sharing company indefinitely -- they could probably lower prices because they're not using that money to supplement the VC money they're spending on R&D.
But you only separate the R&D if you think it won't ultimately lead anywhere. If they eventually actually get self-driving cars working then it's obviously to their advantage to be the same company that people are already using for car service.
The reason why VCs were willing to do that was that they anticipated that Uber (in particular) would monopolize ride-sharing. After that, they intended to replace the drivers (who are still the most expensive part of the ride) with self-driving cars. I spoke with a Google employee, about two years ago, who told me that everyone in the self-driving business hoped to have some big advances ready by 2021.
Turns out that autonomous vehicles are a lot harder than anticipated, so the ride-share companies have had to pivot. That explains Uber Eats.
As sketchy as Uber has been, I have no sympathy for the traditional taxi cab companies. They refused to adapt in the face of a new situation staring them in the face. The New York City medallion-owners just expected to continue farming from the cab drivers with zero effort. Parasites.
I spoke with a guy who had recently come to America and needed a ride. His friends couldn't drive him, for some reason, so they tried to arrange a cab. While they bickered, trying to find a cab company phone number, this guy downloaded the Uber app, punched in his credit card info, and his ride showed up before his friends had finished finding a cab company.
Nevertheless, Uber is a sketchy company and desperately needs regulation.
But you get charged only $10. Uber has already eaten $5 of the fare for you. That money has to come from somewhere. The 30% they take on the $10 isn't covering what they've already knocked off the price.
That money has to come from somewhere. That somewhere is the VC.
The 30% they take is really only stemming the bleeding.
Hubert Horan is an analyst who goes into these costs into detail. http://horanaviation.com/Uber.html
Your mistake (I think) is that you are connecting the costs to the prices on a per-trip basis.
In the hyper-growth phase where the objective is to gain mindshare and market share, their VC and IPO cash can be used instead of charging reasonable prices.
For your scenario it’s entirely possible that the price of the ride is $10 but the cost of the ride to the driver is $12.
I'm not the one telling you that the $3 doesn't cover overhead. Uber is. Taxis that cost more are.
Then leveraging their new-found monopoly by raising rates and becoming profitable....right?
Except that articles like this (and the multitude of others) demonstrate that this simply will not happen. Riders and drivers do the work, pay the costs and will revolt.
Uber has something like 22,000 actual employees. They definitely have to maintain HR departments.
Because driving individual people around in expensive cars burning expensive fuel is not a profitable business (in the economic sense). Where are all the billion dollar taxi empires? It's a tough racket. It's equally laughable that Uber's "killer app" is going to be food delivery.