Uber is reinventing itself in India to survive
A must (must) read! Why did Uber India move to a subscription-based model for autos? What risks Uber faces in US/India? What should be Uber's 10 year product strategy?
Hi, folks! Good morning :)
This tweet caught my attention recently. While the US 🇺🇸 and China 🇨🇳 are busy building cutting-edge AI models 🤖, India 🇮🇳 innovation in certain pockets of fintech & consumer tech is at just next level.
Let me take you back in time. Hear this out—Indian customers are so demanding and don’t want to pay for anything (😂). It’s the toughest market in the world. This is what Uber CEO Dara Khosrowshahi said during his last trip to India.
India is an insignificant market for Uber. Out of its $37.28 billion revenue in 2023, less than 1% came from India. While Uber made $10 billion in profits in the U.S. 🇺🇸, in India 🇮🇳, it operates at a 10% loss, not even achieving break-even.
And then came last week’s biggest news 🚨: Uber India shifted to a subscription-based pricing model (acting like a tech platform, similar to Namma Yatri) instead of its usual commission-based approach for autos.
From marketplace to SaaS 🔄—Uber is now going back to square one, similar to how Meru started, shifting from commission-based earnings to subscription fees from drivers. Let’s break it down! 📉📊
Venture money is recouped in markets that change behavior, as it creates winner-takes-all dynamics. Uber holds the lion’s share in the U.S market now. 🦁
Uber lost $34 billion before turning profitable 💸, it raised a total of $40 billion, and made $10 billion in profit last year, growing at 20% YoY 📈 on such a large base. It will recoup its venture dollars in just three years.
In India, venture capital isn’t playing out the same way for cab businesses 🚖. Ola’s and Uber’s market share is declining with the rise of BluSmart ⚡ and Shroff’s premium service, both of which are hitting their margins. With government also innovating with initiatives like ONDC 🇮🇳, it’s becoming clear that the Indian ride-hailing market isn’t a winner-takes-all game.
I have taken considerable time to deep-dive into this topic. I hope you will share your views in the comments—I’ll read all of them! 👀💬🚀
Why did Uber make the switch? 🚗
1️⃣ Market dynamics & competition
Namma Yatri & ONDC disruption: Platforms like Namma Yatri, powered by ONDC, are cutting out the middleman with zero commissions, putting pressure on Uber’s market share.
New competitors: With players like Rapido, BluSmart (EV-based), and Shoffr emerging, Uber’s market share isn’t expanding.
Govt’s push for public infrastructure: The Indian government is encouraging ONDC-based mobility, aiming to reduce dependence on private players.
2️⃣ Unit economics & driver retention
High commissions = Lower driver earnings: Uber previously took 20-30% per ride, reducing driver income.
Delayed payouts: Drivers faced cash flow issues due to 2-3 week delays in payouts.
Drivers switching to alternatives: Platforms like Namma Yatri allows drivers to collect fare directly.
Flat subscription = Lower costs for drivers: Now Uber charges ₹20-₹40/day, which is a lot cheaper than the 25% commission they previously took.
Financial implications for Uber
Earlier, an auto driver could earn ₹1,000/day. Uber took ₹250 (25%). Now, Uber takes only ₹20-₹40/day. That's around 1/10th of what they used to take
Impact → If Uber autos contribute 20% of India revenue (~$150M), shifting to subscriptions could slash Uber’s per-driver revenue by 90%, requiring a 10x increase in active drivers just to break even
Impact on consumers 🚀
✅ Pros
Lower fares: Since drivers keep 100% of their earnings, fares drop.
Fewer ride cancellations: Drivers won’t refuse rides based on payment or route profitability, leading to fewer cancellations.
Transparent pricing: No surge pricing; fares can be government approved or fixed.
Happier drivers: More satisfied drivers = better service and fewer issues.
❌ Cons & challenges
⚠️ Uber becomes a mere tech platform for autos– Since Uber now operates as a subscription-based SaaS model, it distances itself from direct involvement in auto ride economics, moving away from dispute resolution and customer support
⚠️ Who takes safety liability? – Uber heavily invested in platform trust & safety
(background checks, SOS buttons, trip tracking). With the new model, does Uber still hold responsibility for consumer safety, or does it shift to the driver?
⚠️ Lack of trip insurance & support – With Uber stepping back as a marketplace operator, rider safety policies and support mechanisms could become less stringent.
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Way forward for Uber India 🚀
Hybrid model – Keep commission-based pricing for high-trust, premium rides (Uber Premier, Uber XL) while using subscriptions for regular rides.
Safety subscription – Charge a nominal fee for verified drivers, trip insurance, and 24/7 customer support.
Govt-backed safety compliance – Work with regulators to mandate driver verification & safety standards.
Let’s add PM interview flavour to the remaining part of today’s newsletter.
What major challenges Uber faces globally & in India? Also how would you build a 10 year long product strategy for Uber?
🇺🇸 Uber’s challenges in the US
1️⃣ 🤖 Self-driving car disruption
Waymo surpassed Lyft ridership number in SF. Self driving cars adoption are no more just a case study. Trend is clearly moving towards self driving cabs
Driverless taxis = lower fares → pressure on Uber’s margins & gig workforce. Uber needs to innovate its business model
Uber’s self-driving exit (2020) → now dependent on partnerships, losing edge. Uber tried partnership with Tesla, which didn’t materialise. Uber is trying partnership with Waymo now.
2️⃣ ⚖️ Regulatory & legal battles
Gig worker laws (Prop 22, AB5 in California) → push for driver employee benefits, pushing ride fare compared to self driving cars
Rideshare lawsuits & unionisation → increased compliance & operating costs
Surge pricing scrutiny → potential caps, hurting peak-time profits
3️⃣ 💰 Profitability & market saturation
Highly penetrated market → Uber is at $10bn profit, growing 20% YOY. AV cars & large base puts a question on growth
Food delivery (Uber Eats) faces stiff competition from Doordash & Instacart
Rising insurance & fuel costs impact driver incentives, reducing supply
🇮🇳 Uber’s challenges in India
1️⃣ 🏛️ Government & ONDC disruption
ONDC-backed ride-hailing (e.g., Namma Yatri) → threat to Uber’s dominance. Zero cost infra
Fare caps by state governments, compliance laws like gig workers law make profitability harder
2️⃣ ⚔️ Hyper-competitive, fragmented market
India ≠ winner-take-all → Rapido (bikes), BluSmart (EVs) eat into Uber’s share
BluSmart’s EV model pulls premium users, hurting Uber’s high-margin play
Metro expansion & cheap public transit reduce cab demand for short-hauls
3️⃣ 💰 Price sensitivity & profitability struggles
India = just 1% of Uber’s revenue but remains a key R&D hub
Government is a direct competitor to private players like Uber by making marketplace open source; making sustainable growth tough
🚗 Uber 10 year roadmap
1️⃣ Short-term (1-3 years): Strengthen core business
Driver retention: Higher earnings via upfront fares, instant cashouts, and better incentives
AI-powered safety: Real-time fraud detection, dashcam integrations, and rider verification
Regulatory & legal: Proactively shape gig worker laws and prevent aggressive state-level restrictions
India focus: AI-based fraud detection and multilingual driver support to improve safety and experience
2️⃣ Mid-term (3-7 years): Diversification & profitability
Super app play: Integrate rides, delivery (Uber Eats), and payments into a seamless experience
Fleet cost optimization: Scale EV partnerships (Tesla, Hertz) and autonomous-ready rentals
SaaS & enterprise: Expand B2B mobility (Uber for Business) and launch fleet management software
India focus: Expand electric fleet partnerships with Tata & BluSmart and introduce ride pooling at scale
3️⃣ Long-term (7-10 years): The future of Uber
Full autonomy: Scale AI-driven fleets via Waymo, Tesla, or in-house tech (ATG 2.0)
Mobility subscriptions: Uber Pass for all transport and a fixed-fee driver SaaS model
New frontiers: Urban air mobility (eVTOLs) and automated freight (Uber Freight AI)
India focus: Develop affordable autonomous fleets and integrate multi-modal transport (Metro + Auto + EV) for emerging cities
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