Uber Destroys More Value: Demolishes Bikes from Failed Rental Businesses Rather Than Donate Them
Not that it’s needed, but if you are hankering for yet more evidence that Uber is run by a libertarian narcissists who actively resist doing the right thing because disruption, today’s object lesson comes from Uber’s certain-to-fail e-scooter and bike rental businesses. Uber capitulated to their predictabe mounting losses and shuttered those ventures. But rather than give the surplus bikes away, it had them “recycled,” which is weasel-speak for crushed.
Now of course, Uber defenders might contend this move was economically rational. After all, people who ride bikes might opt for an Uber trip instead.
Even if this were true, it is only in the most penny-pinching way. With level of distress is so high that it seems doubtful that Uber would lose anything other than minute amounts of income, since non-car-owners who obtained bikes through the generosity of Uber would still not use them in really bad weather, or when they had more to carry than they could lug on their wheels.
With Uber’s history of profligacy, it looks like the corporate equivalent of pulling out couch cushions to try to find loose change to see the “destroy the bikes” move as a revenue initiative.
First, to the Uber rationale for bikes, to the extent it had any beyond “keep increasing revenues and hope no one asks about the bottom line. From the Wall Street Journal in late 2018:
Uber has turned its attention to providing customers with a host of transportation options in addition to its core ride-hailing service. Mr. Khosrowshahi said he is particularly hopeful about electric-scooters and bicycle rentals, which he has said can be a low-cost replacement for short car trips in urban centers.
“What we’re going after is essentially to debundle car ownership,” Mr. Khosrowshahi said in an interview at The Wall Street Journal’s WSJ Tech D.Live conference Tuesday. “A world in which the people who cannot afford to buy a car have access to consistent mobility wherever they are, that’s a better world.”
But Uber didn’t provide any data that would allow one to identify the separate impacts of taxi service, food delivery or scooter rentals other businesses on their total results.
Uber was not more forthcoming about the economics of its scooter business in its S-1. As Hubert observed in April 2019:
There are various unsubstantiated claims about “synergies” between scooters and taxis, but absolutely no explanation of the current economics of scooters or how they might someday become a profitable business.
Hubert added in September that:
All of the new businesses Uber has expanded into (food delivery, scooters) appear to have even worse profit margins than car service, and their sole purpose appears to be to boost revenue growth rates, and mislead naïve investors that Uber has Amazon-like potential for profitable long-term growth and can become the “Amazon of Transportation.”
Why belabor the lack of any bona fide business logic behind the Uber scooter venture? Because the financial press faithfully parroted Uber’s ludicrous claims.
But Uber hasn’t stopped believing its own PR. Uber vowed to increase its investment in e-scooters and bikes. It invested $170 million into e-scooter company Lime, the bete noir of San Francisco pedestrians and is conveying Jump, a company it bought for $200 million in 2018, to Lime as part of that transaction.
BBC, CNBC, and others reported on Uber’s “recycling,” as in destruction, of now surplus bikes after selling its electric bicycle and scooter business to Lime. The local transportation company claimed it was oh too hard and risky to donate the vehicles. Representatives from charities in that space disagreed. From CNBC:
Uber is scrapping thousands of electric bikes and scooters worth millions of dollars after selling its Jump unit to mobility start-up Lime earlier this mont…
Uber was keen to point out that while many bikes and scooters are being scrapped, “tens of thousands” of newer models are in the process of being transferred to Lime….
“We explored donating the remaining, older-model bikes, but given many significant issues — including maintenance, liability, safety concerns, and a lack of consumer-grade charging equipment — we decided the best approach was to responsibly recycle them.”
Uber trashing bikes good enough for customers elicited lots of criticism. From Endgadget:
Lime partners with a number of organizations that have a vested interest in promoting bike-friendly streets and micromobility access, like the Los Angeles County Bicycle Coalition, Denver Streets Partnership and Seattle Neighborhood Greenways. Bike Durham, a North Carolina biking advocacy group, said on Twitter that they would be happy to take on these Jump bikes: “Our local bike co-op @DurhamBikeCoOp has been able to re-purpose many old @ridespin bikes that were donated. Contact us @Uber! Let’s make better use of these bikes.” It’s hard to imagine any of these organizations couldn’t find a better use for thousands of e-bikes, even if they weren’t in perfect shape.
Bikes on bikes on bikes just being needlessly recycled instead of repurposed🚲🚲🚲🗑️ pic.twitter.com/6eHNfyimwv
— Cris Moffitt (@CrisMoffitt) May 22, 2020
Astonishingly wasteful. Tens of thousands of perfectly good electronic bikes, some only months old, being scrapped because it’s too much bother for @Uber to find them a good home. https://t.co/5voKHlXKQJ
— Jo Maugham QC (@JolyonMaugham) May 29, 2020
Thank you!!! Instead of @Uber throwing the whole fleet of Jump bikes away, @tierscooters is willing to take care of them, repair them, and give a second life#sustainability #smartcity(???) https://t.co/UPfRtvwbJ0
— Joachim Lohkamp (@JockelLohkamp) May 29, 2020
And a telling sighting:
EXCLUSIVE: New, close-up pictures of the Seattle JUMP 5.5 fleet show that every single bike has *already had their 36V Li-Ion battery removed,* so the manpower existed to do that prior to sending them to scrap. The extent of the waste is unfathomable. pic.twitter.com/zT3nRhYNAs
— Bike Share Museum (@bikesharemuseum) May 26, 2020
If I understand this correctly, liability to Uber was largely if not entirely about the condition of the batteries. Removing them solved that problem….and also meant the excuses for not giving them away were bogus.
The decision to destroy these bikes comes amid a national bike shortage. “We have never seen anything like this in a very long time,” said Dave Nghiem at College Park Bicycles in College Park, MD. “We have never locked down half the planet like this so they can’t do their jobs to build bikes. So, no one has been building bikes for three months. If no one is building bikes, there’s no bikes on the continent,” said Dave.
Uber’s excuse for not ‘splaining its bike and scooter business performance was that they weren’t material, which of course begged the question of why they were worth mentioning. Apparently being “not material” means it’s OK to toss assets away that would be very valuable in other hand, and not hard to pass to them.