Lyft is testing subscription plans for ride-hailing in 30 cities as a way of maintaining customer loyalty amid growing competition with Uber in the U.S., per multiple reports. Lyft has offered a select group of users the option to pay a monthly upfront fee for a set number of rides, with plans ranging from $199 for 30 rides to $399 for 60 rides, per CNN Money. The offer applies to rides under $15, per screenshots shared on social media.
John Zimmer, president of Lyft, predicted that subscriptions will be the future business model for ride-hailing services, comparing plans to music services like Spotify or mobile plans from AT&T or Verizon, per Bloomberg. Ride-hailing services make up 0.5% of miles traveled in the U.S. today, and widespread adoption will take time, he said.
Logan Green, CEO of Lyft, last month said the company’s mission is to shift 80% of vehicle miles traveled nationwide to ride-sharing. He spoke at an unrelated press conference about its self-driving partnership with auto supplier Magna.
Lyft, which provides 11 million rides a week, is trying out a subscription-based business model as rival Uber tests subscriptions and discounts when customers buy in bulk. Subscription models would help to lock in loyal users who may have shopped between the companies for the best price. Uber has tried to ward off Lyft with aggressive price-cutting, but a series of scandals last year triggered a backlash that culminated in calls for boycotting Uber and deleting its mobile app.
Greater adoption of ride-hailing may require more advanced technologies for autonomous vehicles that would eliminate the cost of paying human drivers. But the developing technology has suffered several setbacks in the past few weeks, including a collision between a self-driving Uber vehicle and a woman who was killed crossing the street in Tempe, Ariz. The deadly accident compelled Arizona to suspend Uber’s testing of autonomous vehicles in the state. Waymo, General Motors and Intel were permitted to continue tests.
Lyft began testing the subscription service last month as the company seeks ways to transform transportation methods. The company also recently green lighted a loyalty program for business riders and continues to line up interesting co-marketing opportunities with brands, including a craft beer in partnership with Chicago's Baderbrau Brewing and a unique ride experience in collaboration with Netflix's Stranger Things. The company’s executives have published white papers that predicted the end of personal car ownership in major cities by 2025, per The Verge. They also have pushed for U.S. households to sell their second cars as a way to reduce traffic congestion and carbon emissions. A subscription service for ride-sharing may be more economical than monthly car payments, not to mention the cost of gasoline, insurance, taxes, regulatory fees and maintenance.