How Uber Can Drive Profits

Uber CEO Travis Kalanick. Photo by Bloomberg.

How much the recent spate of negative media coverage of Uber and its workplace culture will have on its business and ability to attract talent is anybody’s guess. But new financial data shows how profitable the ride-sharing firm is in key cities in the U.S. and Europe—and gives a clue about what it has to do to cut its enormous overall losses.

Meanwhile, a team at Uber calculated that the switch to self-driving cars, still many years away, won’t save the company as much as is widely thought. 

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The team figured that Uber may achieve a 5% net profit margin for its business overall someday, including all costs. A future Uber would have no more than a 10% margin, given the expected municipal regulations on pricing for the autonomous vehicles, or because it will turn into a more capital-intensive business that requires the purchase, maintenance and storage of physical fleet assets.

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In many smaller markets last year, Uber’s profit margin was wiped out by extra bonuses Uber paid to drivers.