Uber is planning an aggressive strike against mounting competition in the on-demand transportation market, as it will lower fares for its low-cost UberX service by as much as 25 percent in San Francisco. According to multiple drivers, UberX could see those fare reductions take hold as early as next week, as the company seeks to steal business from peer-to-peer ride services like Lyft and SideCar.
Update: The reduction in fares is expected to go into effect on June 12. And, as far as we know, the lower prices will only apply to rides in San Francisco.
The move to lower fares comes as Uber is facing more competition from taxi e-hail apps and services that use drivers who aren’t commercially licensed. In its home market of San Francisco, Lyft, SideCar, and new entrant InstantCab all offer an alternative by connecting passengers with community drivers who have a car and the spare time, under the guise of ride sharing.
Lyft, in particular, has been growing fairly quickly, serving more than 30,000 rides per week just one year into offering its ride sharing service to the public. It’s also raised a huge, $60 million round of funding led by Andreessen Horowitz which it plans to use to fund expansion throughout the U.S. and international markets. Uber has raised about $50 million since being founded in 2009, but it has a much longer history of generating revenue and is in many more markets.
With lower-priced competition mounting, Uber has also gotten into the so-called ride-sharing business, first in California, but with plans to extend the lower-cost service into new markets. While the low-cost UberX service was first launched with commercially licensed drivers in hybrid vehicles, earlier this year Uber announced that it would also offer peer-to-peer, or ride sharing services on that platform as well.
While expanding into new markets, Uber has also been aggressively trying to recruit drivers from its competition. It’s gone so far as to hire a mobile billboard to drive around San Francisco, urging Lyft drivers to “Shave the ‘Stache” — that is, to shed the pink mustaches that adorn Lyft cars — and join its platform instead.
Uber may have previously sought to steal drivers away from its competition, but now it’s going after their customers. When the new fares go into effect, it won’t be the first time Uber has done so — the company lowered UberX rates by 10 percent when it first introduced the idea of community drivers. And over Memorial Day weekend, it reduced fares by 25 percent in the Bay Area, in a seeming reversal of its surge pricing during high-demand periods. That could have been seen as a test run for a more permanent price reduction.
While Lyft and SideCar have been entering new cities with their ride-sharing service, Uber has an early lead in most markets. In addition to the San Francisco Bay Area, Uber offers black car services in New York City, Los Angeles, Seattle, Chicago, Boston, Washington, D.C., Toronto, Paris, Berlin, Philadelphia, Dallas, San Diego, Amsterdam, Atlanta, Denver, London, Melbourne, Minneapolis–Saint Paul, Phoenix, Stockholm, Sydney, Baltimore, Detroit, Milan, Sacramento, and Singapore.
Representatives from Uber could not be reached for comment.