The Race to Profitability: TNCs and Micro-Mobility

Earth day sustainabilityBy Brian Shaw, CAPP

Getting folks to reduce their driving would seem to be an ideal way to help the environment and improve a region’s traffic conditions. However, any environmental and traffic benefits depend on the mode folks switch to from driving themselves. In the case of micro-mobility and TNCs, these benefits have been a mixed bag.

In San Francisco, studies have determined that the growth in the city’s traffic (that is until the COVID-19 pandemic) is primarily a result of the use of TNCs patrolling the city before, during, and after their rides.

The various electric and/or dockless micro-mobility devices continue to clutter numerous cities’ streets and are found battered and broken. Inoperable and damaged devices are filling landfills. Plus, there have been many riders hurt and some even killed while using hourly-use electric scooters.

Neither of the big TNCs (Uber or Lyft) nor any micro-mobility services have been able to turn a profit and develop a business model that works financially. Their biggest issue is continuing to rely on human labor to provide their service. TNCs need human drivers to provide rides for their customers. Autonomous vehicles have yet to be proven viable and capable of consistently operating in complicated urban environments. Both TNCs have been artificially keeping their rates low, in fact they’re lower than what they have mostly replaced—taxi cabs. While this has help them build market share, it has been at a financial loss. TNC drivers are also increasingly wanting better wages and conditions and the right to form unions to collectively bargain their working conditions and wages. Will the TNCs survive and sustain their current business model, or are they both in a race to autonomy and profitability?

As for micro-mobility, a similar situation is also occurring. Research and development are underway to automate the process that is one of the costliest aspects of the program—the nightly collection, charging, and redistribution of the devices. Until automation occurs, how long can the micro-mobility business model survive?

I would argue TNCs and micro-mobility are only bridge technologies: a means to an end state where autonomous vehicles and automated devices will finally make TNCs and micro-mobility sustainable for the environment as well as financially viable.

Brian Shaw, CAPP, is executive director of Stanford Transportation, Stanford University. This post is part of a five-day series commemorating Earth Day 2020.