Uber Expects Electric Bikes To Hurt Margins

Uber has announced that it will soon be focusing on electric bicycles and scooters for shorter trips.

CEO Dara Khosrowshahi said that while in the short term the move would mean a further financial hit for the company, investors should understand that short-term losses are necessary in order to achieve longer-term goals.

“During rush hour, it is very inefficient for a one-ton hulk of metal to take one person 10 blocks,” he said in an interview with the Financial Times. “We’re able to shape behavior in a way that’s a win for the user. It’s a win for the city. Short-term financially, maybe it’s not a win for us, but strategically long term we think that is exactly where we want to head.”

Uber already added bike sharing to its app in February, and acquired bike-sharing company JUMP in April for around $200 million. The company had already entered a partnership with Uber in select cities, where people can use the Uber app to locate a nearby bike and are given a PIN to unlock it. JUMP operates in 12 cities all over the world, including Portland, Oregon, and Phoenix, Arizona.

In addition, Uber has made deals with electric scooter company Lime and London-based Masabi, which offers mobile ticketing for public transportation.

Although Uber makes less money from a bike ride than from the same trip in a car, Khosrowshahi expects that to be offset if customers use the app to book more trips on a more regular basis. In fact, the company has already seen this trend with cyclists in San Francisco.

“We are willing to trade off short-term per-unit economics for long-term higher engagement,” he said. “I’ve found in my career that engagement over the long term wins wars, and sometimes it’s worth it to lose battles in order to win wars.”