Lyft mimics Uber, lowers fares in 33 markets

A week after Uber enacted its third annual January fare reduction, Lyft follows its lead

More money in the coffers means lower prices for the customers.

Lyft just announced that, starting today, it is cutting prices across 33 markets to encourage more rides and to match (or possibly undercut) its competition, namely Uber.

Some of the top markets affected include the Bay Area (San Francisco, San Jose, Silicon Valley), Denver, Los Angeles, San Diego, Detroit, Baltimore, and Washington.

"At Lyft we want to remain the most affordable option for passengers,” said a company spokesperson in a message to VatorNews. “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."

The company hasn’t revealed exactly how much it’s cutting fares. Also, it’s unclear whether this is a price cut just for the month of January or whether it’s permanent. If it’s the former, then this is just a “me too” announcement following on Uber’s announcement last week that it would be reducing fares for the slow, winter months as it has done for three years running.

If it’s actually a permanent fare reduction, I'm also curious to know how this affects Lyft's business in regards to profitability and revenue. A couple months ago, Lyft’s president and cofounder John Zimmer shared that the company was operating at a $1 billion revenue run rate based on October 2015 financials. But how will new price cuts affect that?

I’ve reached out to the company to clear up some of these questions.

It’s not that Lyft can’t afford reducing fares. The company two weeks ago confirmed that it has raised $1 billion in new funding led by General Motors (GM) with contributions from Kingdom Holding Company, Janus Capital Management, Rakuten, Didi Kuaidi, and Alibaba.

GM actually committed $500 million to the round and announced that it was working with Lyft on an “Autonomous On-Demand Network” for self-driving cars.

The announcement couldn’t have been more timely, as yesterday U.S. Secretary of Transportation Anthony Foxx gave the Department of Transportation a six-month timeline to draft rules governing autonomous cars. In addition, President Barack Obama’s 2017 budget proposal sets aside $4 billion over 10 years for piloting new vehicle systems of this sort.

In a statement sent to VatorNews, Lyft said it was “optimistic” about the plan and that safety was a “top priority” for Lyft and GM as they work toward introducing self-driving cars to the U.S. The companies are not yet offering a timetable for when we’ll see self-driving Lyfts on city streets.