Concerns about Uber and Lyft’s growth potential are rising as some investors, former officials, and analysts are starting to question their overall ceilings and predicting both startups are likely to plateau in the coming years, The Information reports. The chances of the United States turning into a $1 trillion ride-hailing market are becoming slimmer by the day, with some industry watchers expressing skepticism in regards to the industry’s ability to grow by a factor of 40 and justify the massive valuations of the two startups, both of which are expected to push for initial public offerings as early as next year.
Self-driving cars will neither be a major business factor in the near future nor is either company close to commercializing them in the first place; Lyft’s model that revolves around partnerships with automakers and tech companies signals the firm will always see smaller savings from autonomous driving solutions than rivals who committed themselves to in-house development, whereas the fate of Uber’s driverless program is presently unclear, with the company still having all of its trials halted following last month’s fatal Arizona crash which saw its initiative banned in the state, and the startup also didn’t attempt to extend its testing permit in California which expired last Sunday. While autonomous vehicles should benefit both firms in theory, their widespread adoption is years away and isn’t just dependent on the ability of such technologies to replace human drivers in most scenarios but also bets on the solutions rivaling the very concept of personal car ownership. With the U.S. being among the most affordable countries for owning a vehicle, the possibility of self-driving cars being massively adopted because they’ll replace personal transportation methods is small compared to other countries that are presently pushing for their commercialization.
Both Uber and Lyft also have their growth potential endangered due to their general inability to hold on to their drivers in the long term, especially as working for either is still largely seen as a part-time gig in the U.S. With Lyft only expanding outside of the U.S. several months back and half of Uber‘s gross revenue coming from its home country, some industry watchers are skeptical either will be able to justify their latest valuations which stand at $68.5 billion (not accounting for SoftBank’s unconventional investment) and $11 billion, respectively.