After fighting City Hall, Uber is ready to join forces. On Thursday, the ride-hailing app and the New York City Taxi and Limousine Commission announced that taxi cab drivers can soon be called through the Uber app.
New York through the 2010s had tried to slow the onslaught from Uber, Lyft and the like. Those efforts largely failed, leading to devastating losses for holders of taxi medallions. For its part, Uber was sustained only by the kindness of loose venture capital as it racked up huge operating losses. Now the one-time adversaries are being forced to adapt to a newly constrained world. Operators of old and new business models need to co-operate to survive.
NYC taxi medallions — of which there have been a roughly fixed figure of 13,000 — tripled in value between the early 2000s and a decade ago, just when Uber arrived in the city. Drivers, most of whom were immigrants, borrowed hundreds of thousands of dollars to secure the precious medallions just before prices collapsed over the past 10 years. After a rash of personal bankruptcies and suicides, a comprehensive medallion debt restructuring was finally struck in 2021.
Uber’s own economics have not been pretty for years. The company eked out its first quarterly ebitda profit just last year, helped by its food delivery unit that made up for fewer pandemic ride-shares. Its challenge has been finding enough drivers to keep up with resurgent consumer demand. The company has been generous through 2021 with driver incentives. Its fourth quarter “take rate” — how much of a fare it keeps — in its rides business of 20 per cent was lower than the 22 per cent achieved a year earlier.
Uber’s shares were up by five per cent on Thursday but have dipped a third over the past year. Wall Street has soured on growth companies whose business models remain unsettled. NYC taxi drivers may hope that by joining forces with their arch rival they can at least get the breathing room that still accrues to Silicon Valley darlings.
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