Re:Lyft Loses $600M in 2016 as Revenue Rises to $700M
by justincormack on Sunday January 15, 2017 @09:01AM
(#13403971)
The car companies may finance them, in order to get their models sold. Car companies have always been huge financing operations, and cars are reasonably good in terms of debt finance, as they are relatively easy to repossess and resell.
Re:Lyft Loses $600M in 2016 as Revenue Rises to $700M
by eaurouge on Sunday January 15, 2017 @02:29PM
(#13405865)
The one valid cost you've mentioned would be the cost of parking all those cars. A couple of points. Cars in service don't need parking, obviously. They're either ferrying passengers or on their way to the next fare. And, as demand for transportation drops on a given day, parking availability increases and parking costs drop. Finally , a car being removed from service, on a given day, may be sent to low-cost parking, far from expensive urban centers. Many Uber/Lyft drivers do this currently and still make a profit.
The cost of infrastructure and automechanics, etc, is spread across the fleet. That's the benefit of operating at scale - economies of scale. You don't lose money merely because you're operating at scale, that's not how it works. What would it cost you to maintain a Prius? How about 100 identical Priuses? It's not 100x.
Finally, the comparison to FedEx/UPS is flawed. Those guys don't just have a fleet of trucks to maintain, they have to deal with shipping centers, hubs, air transportation, multi-day package tracking, and the logistics nightmare that's involved in doing all that and still getting packages delivered. They'd rightfully tell you managing their fleet is the least of their concerns.
Expanding the fleet to a new city now means buying land, building facilities, hiring mechanics and admin staff, and buying the cars. At this point Uber would look more like UPS - with UPS-like growth - than a tech company. All the while, unless they raise prices significantly, they're still losing money.