Uber’s Monthly Operating Cost in Asia Reaches US$300 million

10 Dec

Uber has rapidly increased its market share but that came with a high cost. With the huge amount of subsidies, Uber has been incurring monthly operating cost of as high as US$300 million in Asia.

Meanwhile, Uber’s main rival in China, Didi Kuaidi, continued its overseas expansion by investing in Uber’s U.S. rival Lyft, GrabTaxi and Ola and partnering up to offer services around the world. The partnership brought challenges to Uber and also affected Uber’s fundraising.

In 2015, Uber contributed a large portion of the raised funds to expanding its market in China. Reports by market analysis firms suggested that Uber accounts for 16 percent of China’s online car-hauling services, while Didi Kuaidi takes the lead with a whopping 83 percent.

Following successful fundraising rounds, Didi Kuaidi in the second half of 2015 invested in counterparts overseas, including U.S.-based Lyft, Singapore’s GrabTaxi and India’s Ola. These four companies will jointly build a ridesharing service covering 50 percent of the global population.

Sources said Didi Kuaidi’s expansion strategy is so effective that Uber has no choice but to continue offering subsidies in order to increase market share. Currently, Uber’s operating cost in Asia is estimated at US$300 million every month. Uber has a cash reserve of around US$2.5 billion, while Didi Kuaidi, Lyft, GrabTaxi and Ola have over US$5 billion in cash reserve. Meanwhile, Uber’s fundraising and market valuation have also been affected; its valuation has been revised to US$62 billion from US$70 billion.

Just 15 months into operation, Didi Kuaidi now has the world’s highest daily orders as a car-hauling service provider. Didi Kuaidi has more than twice the global daily orders of Uber and six times Uber’s daily orders in China. Didi Kuaidi also has 10 times more vehicles than Uber but the Chinese company’s operating cost is only 25 percent that of Uber.

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