Over 100 million people worldwide use Uber (the leading ride-sharing company) every month. This number is even higher if we combined all the users from other uber like companies. There are many other ride-sharing companies besides Uber that are operating in several countries and cities worldwide. Some of the other big names include Lyft and Bolt.
All these companies almost use the same Business Model that involves connecting drivers to passengers via their ride-sharing mobile App. Then the money got from the passengers is shared between the drivers and the ride-sharing company. The percentage that each company takes from the drivers is not uniform across all companies.
Ride-sharing companies have been steadily growing across that globe in the past ten years. However, they have faced safety challenges that have led to some of them being banned from operating in some cities. These companies are also threatened by new technologies like self-driving cars that could likely put them out of business if they don’t adjust to the technology. But the good news is these companies are aware of this threat and most of them have started taking action regarding this. In this article, we are going to briefly discuss the future of ride-sharing companies.
So, will ride-sharing companies be around in the next 10 years?
By the look of things, ride-sharing will be around come 2030 unless something abrupt happens between now and them. However, their mode of operation is what will likely change due to the ever-changing dynamics especially in the tech industry. The increase in smartphone usage and faster internet is what has been favoring the operation of these companies. With smartphones and the internet getting cheaper every year, we expect ride-sharing companies to penetrate more countries and cities worldwide.
How self-driving car technology will affect ride-sharing companies
Self-driving car projects are already in high gear with companies like Tesla and Google already testing their technologies on the streets. So, if these cars fully hit the streets, we may no longer need drivers in public transport vehicles. Ridesharing companies that will likely exist through this decade are those that will adopt this technology faster. Those that will stick to the current methods of using drivers will likely be pushed out of business due to the high costs of operation. This because paying driver commissions is among the major costs that these companies incur.
Lyft and Uber already have self-driving cars on the road and users are given the option of either selecting self-driving cars or those having drivers. Of course, some people are still not yet assured of the safety of self-driving cars. But as time goes by, people will adopt slowly and, in a few years to come, we may likely see driverless cars being more common on the road than they are today. Uber has its own self-driving cars division called the Advanced Technology Group (ATG). On the other hand, Lyft is partnering with Alphabet (Google) and Aptiv to power up their self-driving cars section as well.
If the self-driving projects of the ride-sharing companies play out well, these companies will become more profitable than they are now. If these projects become a failure, in the long run, these companies will likely be out of business. So basically, self-driving is like the last strategy that these companies will use to cut costs and stay in the market longer.
Dealing with the competition
Currently, there is a lot of competition in this industry that will further be intensified when more companies roll out their self-driving car projects. When projects by companies like Tesla and Alphabet get in full gear, ride-sharing companies will be heavily affected. The option that most of them will have to manage such competition is partnering with the companies making driverless cars. At the moment Lyft already has a partnership with Google and Aptiv. Lyft customers in some cities can now order for self-driving cars from these two companies.
Besides self-driving cars, these companies also face competition from delivery companies. Some of the ride-sharing companies like Uber are already into the product delivery business by using their drivers and riders to deliver stuff for people within their cities. This industry already has some major players like Amazon, FedEx, and DHL which are already established and also enjoy economies of scale. Ridesharing companies that are getting into this industry may have to offer extremely low prices to be able to beat the competition from the major players.
Ride-sharing companies are likely going to be around in the next 10 years. However, this will require strategizing and being able to overcome the handles of operational costs, safety, and competition that they are likely to face along the way.
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