Uber is good for drivers
Torque: Uber prevails against its drivers
The mood was extraordinarily good in parts of San Francisco on November 5, 2020. Because they had won an important referendum: Proposition 22 had given the choice of whether workers in the gig economy will be considered employees at companies like Uber in the future or whether they will be classified as freelancers. The latter do not receive any unemployment or health insurance or any other support. The majority of Californians voted in favor of the position of Uber, Lyft and other companies. In short: you voted against the social security of the drivers.
According to Uber CEO Dara Khosrowshahi, this was an important victory in California. The US state had only just decided that Uber drivers were employees. His company plans to get similar votes rolling in other federal states. At the same time, the aim is to enforce the resolutions from California throughout the United States.
The win was important to Uber. If you had failed the vote, you would have had to transfer all drivers to salaried employees. The business model of Uber and almost all other gig economy companies only works if the drivers and deliverers act as freelancers. Social expenses are not included in the business plan. It is said that you would not be able to pay the five million or so drivers who work for Uber worldwide. [Contentad keyword = “adsensegs1 ″ align =“ left “]
Uber posted losses in 2020 and the EU is putting pressure on it
The financial pressures on Uber have grown tremendously this year. The corona crisis has caused a massive slump in revenue in the USA and Europe. In the spring, bookings fell by 70 percent in some cases and business, especially in Europe, has not really recovered. The result for the third quarter of 2020 was minus 50 percent in bookings and overall sales of the company fell by 18 percent. Here the on-demand deliveries saved the company from further failures.
But the pressure on the company is growing. As good as the news from California was, it looks bad in other countries. In the UK, Uber has just been ordered to pay £ 1.5 billion in VAT retrospectively.
In the EU, the situation for Uber is still not good: the service is banned in Spain, while in France and Germany the company is only allowed to offer its services to a limited extent. There is no change in sight. Although the passenger transport law in Germany will be adjusted, Uber will not be able to make an offer like the one in the USA. Furthermore, a ruling by the European Court of Justice applies that Uber is to be regarded as a taxi service. Uniform Europe-wide approval of Uber is therefore no longer possible.
Without a driver, operating costs would fall by 40 percent
So it's no wonder that Uber is thinking about how to make the company leaner. The rental bike business has already been withdrawn and a buyer is now being sought for the Advanced Technologies Group (ATG), which is responsible for the development of autonomous vehicles. The part of the company is said to be worth 7.2 billion dollars, so a sale would bring a lot of money into the till. Money that is urgently needed so that Uber can intensify its international expansion and lobbying work.
But autonomous vehicles are exactly what Uber needs. If you no longer need drivers, you can save yourself expensive disputes in court. Without a driver, the operating costs for taxi services would fall by around 40 percent. However, Uber would then have to operate a fleet of several million vehicles. Which then partially eats up the saved costs.
Uber will have to fight to be internationally relevant. That will not be easy, because the situation is currently not looking good, especially in the EU and India. Not every country will allow Uber not to treat drivers as employees.
Don Dahlmann has been a journalist for over 25 years and in the automotive industry for over ten years. Every Monday you read his column "Torque", which takes a critical look at the mobility industry.
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