Secondly, many of us decry regulations. But it seems to me that Uber's dream of people not owning cars and relying on Uber is not going to happen without some regulations. Case in point:
And today, a coalition of companies—including Lyft, Uber, and Zipcar—officially announced that they were signing on to a 10-point set of “shared mobility principles for livable cities”—in other words, industry goals for making city transit infrastructure as pleasant, equitable, and clean as possible. Some of the 10 statements, like “we support people over vehicles,” are vague but positive. But the final one speaks loudly about what city roads of the future could look like: “that autonomous vehicles (AVs) in dense urban areas should be operated only in shared fleets.”
This point keeps getting made, but their cut is ~25%. The driver is getting ~75%. For it to be fundamentally unsustainable, it'd have to be impossible to run the entirely administrative / virtual side of the business on 25%, which is difficult to believe.
It might be true if Uber was simply a marketplace bringing together drivers and riders through their platform. Both could then agree on a price and Uber collecting 25% irrespective of the agreed price. Something like ebay. That is not true for Uber or any other ride platform.
Not only Uber brings two parties together it also sets the pricing terms. So today if drivers want a higher price or rider wants to a pay a lower price, neither can do that and have to abide by Uber's rule.
So, when someone says the rides are underpriced that means Uber is setting pricing terms which are lower than existing market. A $20 Uber ride might be actually worth $30. Drivers put up with a lowered cut because
a. Lot of people do this for extra cash on the side. and
b. Uber's incentive schemes - do x ride and get extra money.
So drivers are happy.
While as a customer, I pay significantly lower which make me happy.
While Uber foots the $10 difference for the sake of building an audience.
But, with price corrections things might change.
No. I'm saying other factors affect their profitability, and that it's very difficult to believe that a company that weren't spending dramatically in other areas couldn't be profitable by just running the SaaS platform for a 25% cut.
The rest of your post suggests a misunderstanding of how markets work. If they're getting drivers voluntarily choosing to work for them for the rates they're paying (including in competitive markets), that rate can't be too far from the market rate.
So the only way the prices could be subsidized is if the rest of the cost of the ride can't be done in the ~25% they're charging... but of course it can. That's a huge cut for administrative costs, accepting payments, and running a SaaS app.
For someone to compete with Uber, they'll have to offer better service (which will be tough) or better prices (which will be lower). There's no reason to believe some bubble is going to pop and Uber prices will increase dramatically overnight. People have been saying this for years but I don't see how it's any more than wishful thinking.
Or does it imply they're likely spending a lot of money on development, expansion, and breaking into new markets (like Uber Eats)?