Why Upshift will win in the new COVID-19 landscape
While our competitors will all be struggling in the next year or longer due to the coronavirus, Upshift is well positioned for growth. People and and will continue to be less willing to travel with shared transportation services like rideshare, transit, carshare, or rental car due to health risk concerns. Even car sales will be down during a recession as people are concerned about job security and don't want to lock in long-term large financial commitments. We expect this landscape to be the "new normal" until we have a vaccine (and get back out of the economic recession), both of which could still be 12-18 months away.
Upshift delivers a disinfected car, that you drive alone, with no long term commitment.
Here's how we see the rapidly evolving landscape playing out and how Upshift is in a perfect storm.
The San Francisco Municipal transit agency has slashed their service down to just 20% of bus and train lines, which are running very infrequently and sporadically. Regional train networks like BART and Caltrain service are running half as many trains. Transit ridership is down by 90% across the San Francisco bay area. These agencies are sadly struggling to survive this crisis. Even once shelter-in-place ordinances are lifted in May, many people may continue to work from home or may choose to drive to work if they need to commute. Transit ridership will continue to be down for a long time as people will fear being crammed in with many others on a train or bus for an extended period each day.
If people in cities want to use a carshare service, they may be concerned about using shared fleets that haven't been disinfected. These cars are typically only cleaned every two weeks (and even now during the epidemic they are lucky to get to them once a week). But during those cleanings, dozens of people will have touched the steering wheel, shifter, radio controls, etc. You will need to bring your own disinfectant supplies to clean the car each trip to be safe as surfaces can still contain the virus for days. This is even more the case with P2P carshare where cleaning is left up to the individual car owner. And many may still be uncomfortable or just don't want to deal with the hassle or risk. Carshare services are now seeing drops of 50% in revenues as they are pay-per-use. Some are looking for bailouts to stay afloat. Others are trying to pivot to weekly or monthly rentals. They are drastically cutting down their fleets, but this then leads to limited vehicle availability, and further member churn if they cannot reliably get a car when they need it (or you need to risk your life by riding transit or rideshare to get across town to the closest vehicle).
Rental cars are dependent on airline travel for business and leisure travelers. Airlines are unlikely to pick back up any time soon- and neither is car rental. Business is down in a recession as is leisure travel as people have less disposable income. As more people decide to work from home, they will put fewer miles on their cars- so cars will break down less often, which is the third major consumer demand stream for rental car. Even if the economy bounces back, people will be concerned about spending long time periods in close proximity to other passengers with recirculated air. A plane is a petri dish for infection. It is impossible to maintain "social distance" on a plane. 50% of rental car business is from airplane travelers, so if planes don't pick back up neither will rental car. Rental fleets are dumping cars like sandbags on a rising hot air balloon right now and it isn't clear when or if they will be able to increase their fleets again.
Rideshare use is down 70% as people are afraid of sharing a car with strangers who might be infected. More importantly, drivers are exposed to dozens of passengers each day and are at high risk of infection. Fewer people want to drive- and fewer want to ride. Drivers may be asymptomatic (or mildly symptomatic) and keep driving because they don't get sick pay so if they don't drive, they can't make their rent or car financing payments. Since individual drivers are responsible for cleaning and sanitizing cars, it's impossible to ensure they do so regularly or at an acceptable level. And they can't possibly disinfect the seat belt between each passenger. Sharing rides with strangers on UberPool and LyftLine have been completely discontinued. While lockdowns may open up, this fear will likely continue for a long time- with good reason as the virus isn't going away any time soon. These services were already losing money. They may even have trouble raising their next rounds of capital unless they can make up for all the rideshare losses with the new spike in food, restaurant, and grocery delivery demand. But even with delivery, restaurant demand is currently at 25% of prior levels so there may not be enough demand there to compensate. Political will to retain, enforce, and expand upon driver benefits and grant employee status like in CA bill AB5 last year will likely also get stronger in the coming year as the 'flexibility' of gig work that doesn't come with health insurance and sick pay is revealed for being an exploitative labor practice.
1/3 of the population in San Francisco currently doesn't own a car and rides transit to work. If they do decide to start buying cars to avoid the health risks of riding transit, they won't want to lease cars with long term commitments due to fears of job security. What happens if they lose their jobs and are stuck in a 3 year car lease? Dealerships have all also been closed this month and may continue to struggle to get people to commit to taking on significant financial burdens in a recession (or even come into the show room to shake hands and sign paperwork). Car sales dropped for years after the 2008 recession and the US government even had to bail out the auto industry giants like GM. Auto giants are worried and they should be. Most of our members don't have free fixed parking and don't want to drive a car every day, so they weren't that keen to buy, lease, or even subscribe to a car they rarely drive anyway. They are going to be even less inclined to buy a car now.
Like other transportation providers, Upshift has had a significant drop in utilization during the shelter-in-place ordinance- as much as a 50% drop. People just aren't leaving their homes much. But only one member canceled due to concerns over the pandemic. Unlike all our competitors, our subscription revenues have been largely stable- a fact which boggles the mind of our friends in the carshare and rental car industries who have literally been seeing two months with no revenues at all and some are on the verge of bankruptcy now. While it has been harder to convert new members, many tell us that they plan to join after the ordinance lifts. People are getting stir crazy from being quarantined. We expect a huge spike in demand to get out of town and get into nature and other outings once the ordinances lift in May. That's why, unlike everyone else, we haven't sold any of our cars. Because we know they will be hard to replace in a month once demand jumps up but car production has been shut down for months. And even if we had reduce our fleet, our members wouldn't experience any loss in service or availability since it doesn't matter if we have a car that happens to be near you when you want it- we just need to have any car available since we bring it to you. Furthermore, we rely on our own fleet- not someone else's. If it was P2P, then owners might not want to share anymore. Dealerships are all closed and wouldn't give us cars. Rental car fleets are selling off all their cars. We have full control our fleet so we've experienced no disruption to our supply.
So then why will they join Upshift? We deliver you a vehicle you drive on your own. You don't need to share the car with anyone else. Our concierges disinfect cars between each and every trip. We're integrating vehicle telematics and building a member app so you can find and unlock your car on your phone at your leisure- no need to meet anyone to get a key at the start or end of your trip. Since the car is delivered, you won't need to get on transit or get into rideshare just to get to a rental counter or distant carshare location. If you were thinking of leasing a car, there's no long term commitment with Upshift. We're even piloting a Monday through Friday Commuter plan so you can keep a car to yourself to get to work midweek and other members can use it on the weekends for errands or to get out of the city. You can cancel anytime and you only pay for what you use. We take our cars in for routine service and repairs- one less hassle, and one less human interaction. Our members are local, not travelers, so they are already here- we aren't reliant on the airline industry or auto repair shops. Even during the shelter-in-place ordinance, our members continue to do a lot of the same routine things like grocery shopping or going into nature. We have been hiring our delivery concierges as employees and providing paid sick leave from day one. We have always had hand sanitizer in all our cars and we provide our concierges with disinfectant wipes, cleaning supplies, face masks, and gloves. Sadly, they probably have better protection equipment than some of our frontline healthcare workers!
Upshift will be not only the most convenient and flexible shared vehicle solution - we'll also be the safest. We are in the strongest position of anyone in the transportation industry to grow right now. And that's not a pivot. That's by design.
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