Riding alone in a car is a luxury—an increasingly unaffordable one

UBER’S INITIAL public offering, due after The Economist went to press, will be one of the largest in tech history. The hoopla cannot drown out uncertainty about the firm’s future. Ride-hailing platforms have grown hugely in recent years, changing the face of urban transport. They have also been virtuosic losers of money (see article). Lyft made an operating loss of nearly $1bn in 2018; Uber, about $3bn. The flow of red ink mainly represents subsidies from investors to riders: cash that allows average Joes to feel as though they have a personal car at their beck and call. It will not last. But Uber passengers are not the only road-farers facing straitened circumstances. Car-related subsidies of all sorts are becoming harder to sustain. Their loss could reveal mass travel in single-occupancy cars to be a no-longer-affordable luxury.

The mania for tech platforms that match cars with riders rests on the idea that they can turn car-hire into critical urban-transport infrastructure. Perhaps ride-hailing could spare millions of people the cost of owning cars that mostly sit idle, and allow vehicles and roads to be used more efficiently. But increased scale has yet to...

via The Economist: Finance and economics Business Feeds

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