TMCnet Feature
February 18, 2022

Insights Into the Post-Pandemic Future of Ridesharing



There were many commercial casualties as a result of the pandemic. While some thrived from the conditions, others faltered, desperately trying to stay afloat despite having no alternative services to offer to those in lockdown.

Inevitably, ridesharing companies suffered, with transportation and commuting needs drastically lessened throughout the pandemic's peak. Uber reportedly lost a staggering $15.3 billion across 2019 and 2020, while Lyft suffered $4.4 billion in losses for the same period.



But now, despite Omicron's current rein, vaccination rates are up, and freedoms are mostly being regained. So, just how has the ridesharing sector fared, and what is the future for the industry? Here are some interesting insights into the challenges and potential for the future of post-pandemic ridesharing.

Multi-Occupant Shared Riding Model in Autonomous Vehicles on Indefinite Hold

Strictly speaking, the term 'Ridesharing' should relate to the concept of multiple travelers sharing transportation to reduce costs and congestion while being kinder to the environment. However, the term quickly became the common name used to describe ride-hailing companies such as Uber and Lyft, describing an arrangement in which individual passengers travel in a privately owned vehicle for a fee.

Prior to the pandemic, these ridesharing enterprises began receiving backlash for causing increased urban congestion, and in response, they sought to move towards a future of multiple occupancy trips. Likewise, autonomous vehicle manufacturers also began preparing for a future of shared-riding by designing multi-person pods. President of Lyft, John Zimmer, once claimed that autonomous vehicles for shared urban trips would account for most ridesharing use by 2021.

Now though, the concept of shared riding is firmly on hold, with the fear of viral disease spread sent into overdrive by Covid-19. Moreover, the shared-riding concept seems all but abandoned since the pandemic hit; Lyft offloaded its developmental unit to a Toyota subsidiary in 2021, after Uber sold off its autonomous vehicle division the year before, citing mounting costs and safety concerns.

Ridesharing Concept Under Fire Over Broken Promises

The novelty of ridesharing that initially promised so much is now becoming ever more disenchanting as a sustainable transport option. Not only did Uber and Lyft's promise of self-driving cars fall by the wayside, but their projections of drastically reducing private car ownership, city congestion, profitable business models, and consistently affordable rides have all turned to dust.

Not only have private vehicle sales begun to increase after an inevitable slump in 2020, but studies have found that the switch from private vehicle use to on-demand rides actually increases the external costs of an average trip by approximately 35 cents. This cost is not the burden of the individual user, but is calculated based on additional congestion, noise, and collisions caused by ridesharing. The study concluded that society as a whole is shouldering these costs through an increase in mortality risks, vehicle and infrastructure damage, congestion, and climate impacts.

Safety is also of increasing concern for the ridesharing sector. For example, Uber's 2019 Safety Report revealed that 58 fatalities and 3,045 sexual assaults occurred out of 1.3 billion rides in the U.S. that year. The company responded by increasing its safety features and introducing initiatives such as the Industry Sharing Safety Program. Lyft also added many new safety features, including the PIN verification system to prevent their riders from getting into the wrong vehicle.

Rideshare accident lawyers from Shuman Legal explain how tricky it can be to receive compensation following an accident or injury related to ridesharing. "The goal of the rideshare company is to pay as little as possible, and there are many loopholes that can release them from any liability. Therefore, if you are the victim of an accident or injury resulting from a rideshare incident, it's imperative that you consult with an expert lawyer."

It is also vital that rideshare drivers obtain specific rideshare insurance coverage to close the gap between personal and commercial coverage, ensuring adequate protection in case of an accident.

New Startups Offering Promising Business Model Improvements

Another major issue for rideshare giants like Uber and Lyft has been the controversy around their driver's earning potential and job stability. These companies have spent years skirting laws now to promote growth while in no way prioritizing the working conditions of their drivers. For example, in response to a California law granting drivers employment status and benefits, both Uber and Lyft teamed up with gig companies like DoorDash.

They collectively outlaid over $200 million to push through a ballot measure that effectively ensured that thousands of workers would not be able to rely on a consistent wage - a law that a state judge openly deemed 'unconstitutional.'

Going head-to-head with the current giants of ridesharing, startups such as Alto, Revel and Kaptyn are focusing on taking over the market by offering an alternative business model that they hope will overcome many of the sector's controversies.

Positioning themselves as 'Rideshare 2.0,' these companies seek to appeal to the myriad of drivers lost by Uber and Lyft by offering employed driving positions in a company-owned fleet of vehicles. By offering all of the security and perks of employment and maintaining their own fleets, these enterprises aim to provide consistent, reliable, and safe ridesharing experiences for both riders and drivers.

These startups' vertically integrated business models will also allow them to roll out progressive environmental initiatives such as electric fleets more efficiently than the current market leaders. Gig-driver ridesharing companies such as Uber and Lyft can only convert to electric vehicles as quickly as they can convince their self-employed drivers to upgrade their personal cars - a tough ask considering the challenges their drivers already face.

The Post-Pandemic Future of Rideshare

The ridesharing industry's future is uncertain, with new covid strains continuing to disrupt any consistency in return to a new 'normal.' With an ongoing fear of disease transmission and the industry hemorrhaging so much money, it seems that any hopes of autonomous vehicles or multi-occupant trips being rolled out in the near future have been dashed.

That said, there are some clear indications that, post-pandemic, the ridesharing business post-pandemic model will require continual improvements to succeed. Time will tell as to whether Rideshare 2.0 will prevail, or the big guns Uber and Lyft will come back out fighting to keep their market majority by making significant changes of their own.



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