The weather outside may be downright frigid in most parts of America right now, but over at ride-hailing services Uber and Lyft, things are really starting to heat up, as yet another price war begins to take hold in dozens of major cities across America. Contained within a simple statement on Lyft’s blog page, the company announced that “prices will automatically be lower in your Lyft app starting January 15,” and that this move was designed to “help you get out and do more,” even when we all know it’s likely a direct response to Uber’s move a few weeks back.
But this announcement is not just retaliation to Uber’s decision to slash prices across the country, it’s also a genuine attempt at drumming up some much needed winter fares, a time that’s typically tough for most automotive segments. Fortune put a piece together when the news first hit, talking about how when Lyft made its similar announcement, it specified that “33 of its biggest markets including San Francisco, Los Angeles, Denver, Washington D.C., and Baltimore” would all be included in this price cut. It also mentioned that Lyft didn’t reveal a lot of details regarding the price cuts themselves, nor how long this deal would be good for, instead stating that the size of the cuts would vary depending on the city.
“At Lyft we want to remain the most affordable option for passengers,” the company said in an online statement. “We also know that in January many people make resolutions to save money. So starting today, we are lowering prices in 33 markets to get people back on the road at a lower cost and help ensure our drivers are in high demand.”
Coincidentally, this announcement came just days after Lyft solidified a $500 million deal with General Motors, a move that gives the company a much needed amount of financial backing, as it tries to stay competitive with Uber, a company that also just raised fresh funding. This price war has become all too familiar ever since both companies emerged on the scene a few years back, but this time the stakes are the highest they’ve ever been, so if you live in a big city, be prepared to hear a lot about this one.
Basing its decision to slice prices around the initial financial fallout following the holidays, Lyft says that it wants to help consumers keep their new year resolutions of saving money by being “the most affordable option to get where you’re going.” It’s a move that is indeed well timed and appealing, but not everyone is going to be happy to hear this news.
Price cuts for customers is undoubtedly a great way to propitiate potential rides, but it is also a pain in the ass for many of Lyft’s drivers, many of whom rely on their earnings as a primary source of income. We saw this move backfire on Uber when it made its own announcement about slashing prices and drivers around the U.S. staged protests. Under the restructured price plan, a new payout program for drivers emerged, albeit one that guaranteed certain hourly wages only if specific criteria was met.
Critics of the plan were quick to mention that the new wages were too low, and while Lyft has promised that it plans on keeping its drivers from the 33 cities in question informed about how much they can expect to make, some drivers remain skeptical of the potential pay-off. On the bright side, Lyft says it will continue to initiate its “Power Driver Bonus” program, which allows drivers to keep more of their earnings when a certain amount of hours are reached within a week. This will also continue to be in effect alongside its popular tipping feature, which rewards drivers who have both skill and charisma while behind the wheel.
“Lowering prices during a seasonally slow time, like the cold winter months, helps us make sure you can always get safe, affordable rides wherever you’re going,” Lyft says. A strategic move that will likely continue to escalate things, as it and Uber try to entice customers like never before.