Uber plans to switch its focus to electric bikes and scooter over car despite the fact that the company will suffer loss initially. Dara Khosrowshahi, CEO, said that it is difficult plus time taking for cars to go inside the narrow streets of a city and that is where the demand for electric bikes occurs.
It has spent around $200m for its new e-bike business this year and the investment will continue despite the losses. "In the short term, it might cost us but in long-term it would add huge profit and that is where we exactly want to head," said Khosrowshahi.
Uber operates its e-bike business in around 8 cities in the USA, including New York and Washington and soon they will launch its bike business in European cities Berlin, being the first city. The revenue at first will be less but it will grow in long-term once the users are friendly with the same.
At first, the uber drivers were not very convinced about the idea until they got to know that their short rides would be replaced by the long rides and more earnings. Renting bikes and scooters will earn them less profit than cars but it will cover the profit by replacing the long rides for short rides. "We are willing to trade off short-term per-unit economics for long-term higher engagement," CEO told the FT.
Uber is making good revenue from the taxi business but its expansion into new areas of e-bike and scooters has added losses to it at a great rate.
David Brophy, professor of finance at the University of Michigan, told Reuters that the firm could expect to see its valuation slashed in a public listing if it did not show more progress towards becoming profitable.
According to BBC, the basic cost of hiring a scooter is about $1 (76p). Riders pay more the further they travel.
