Lyft, the Largest Bikeshare Operator in North America, Wants Out of the Business

Lyft, a taxi company that also operates the largest bikeshare networks in North America including New York City and Washington, D.C.’s systems, wants help subsidizing the business or be rid of it altogether in a bid to achieve overall profitability, according to a report in the Wall Street Journal. 

“Lyft has received strong inbound interest in our bikes and scooters business,” Lyft wrote in a blog post. “It’s only logical for Lyft to listen to credible proposals and explore strategic partners and options in several forms to serve more riders in more cities.” A Lyft spokesperson declined to comment further.

Bikeshare systems are good for cities. They provide an alternative form of near-zero emissions transportation and can be a quick and fun way to get around town using mostly existing infrastructure while reducing traffic. But for a brief period in the late 2010s, it was fashionable for tech companies to invest in or absorb bikeshare systems. Several “dockless” bikeshare companies like Ofo and MoBike, in which riders could abandon their bikes wherever they wished sparking widespread community backlash and received billions of dollars in venture capital funding before crashing and burning. Uber purchased JUMP, one the hottest dockless bikeshare companies due to its innovative electric drivetrain, for $200 million before abandoning the business and junking the bikes.

For its part, Lyft purchased Motivate, an operator of bikeshare systems in various U.S. cities where the bikes have to be locked in designated docks for about $250 million. Although controversial at first, docked systems have had more staying power, becoming accepted parts of city streets in recent years and a more stable business altogether.

But the economics of bikeshare systems, like all forms of transportation, have been difficult. Initially, to get the systems in place about a decade ago, city leaders had to promise the systems would not cost taxpayers any money, a tough proposition for any type of transportation (the Washington, D.C. system receives some subsidies now and is also the cheapest in the country to use). As the systems grew, they required more bikes and more labor to do repairs and maintenance. And the introduction of e-bikes, while a boon to both the usefulness and enjoyment of the systems, increase costs because they cost more and the batteries have to be manually swapped. Electric bikes are also more likely to break and don’t last as long because they’re used more. For-profit companies like Lyft try to cover these costs by charging more for e-bike trips. Cities like New York respond by capping the number of e-bikes Lyft can operate at 20 percent of the fleet to preserve affordability, despite demand for e-bikes being higher.

This tension between profitability, demand, and running the best possible bikeshare system comes to a head when the operator is a taxi company using the bikeshare system to get people to, ultimately, take more taxi rides. Lyft, which has seen its market share in taxi rides diminish compared to Uber, appointed a new CEO, David Risher, last year to try and reverse course. Risher oversaw mass layoffs to try and lower the price of taxi rides to be more in line with Uber’s. And on a recent earnings call, when asked about the bike business, Risher said that “when people ride e-bikes they like them a lot,” but from his perspective he thinks “we haven't done the job we need to do to make sure that every time a person rides the bike, they get welcomed into the Lyft ecosystem, and frankly, welcome into the rideshare side of things. So, we'll do some thinking on how to do that better.” In other words, Lyft’s CEO thinks Lyft needs to do a better job getting people to take fewer e-bike trips and more taxi trips, which is exactly the opposite of what dense cities need.

“If what is in that WSJ story is true,” said David Zipper, a Visiting Fellow at Harvard Kennedy School who studies urban mobility, “it suggests there may be a conflict of interest that is irreconcilable between bikeshare and ridehail.”

The question for cities and bikeshare users now is what the next iteration of bikeshare looks like. For his part, Zipper has advocated for public subsidies, calling the deals a decade ago for bikeshare to pay for itself as the industry’s “original sin.” This would put bikeshare in line with buses, trains, and yes, even cars, as modes of transit that receive public subsidies. It would make sense, Zipper argues, for local transit systems to play a role here, since they have experience with fleet management and the most useful version of bikeshare is one that works seamlessly with other forms of public transit. 

But whatever happens next, it is clear that after more than 15 years, bikeshare is better than a mere for-profit venture. It has earned its keep as a true public good. “I think if you took a survey of city DOT [department of transportation] directors and senior executives about whether bikeshare needs to remain in your Top 20 US city,” Zipper said, “I think you will find near unanimous consensus that it does.”

Correction: A previous version of this article stated Lyft owns bikeshare networks in New York City and Washington, D.C. Lyft does not own Capital Bikeshare, the D.C. network. That network is owned by the seven public jurisdictions in which it operates. Lyft is the network’s operator.