Following Uber and Lyft’s threat to leave the Minneapolis market over minimum pay rules, at least nine new ride-sharing platforms are ready to enter the Twin Cities market.
With Uber exiting the metro area and Lyft leaving Minneapolis, a prime opportunity has opened up for these startups to tap into a vast pool of drivers and passengers without facing the dominant competition that has disrupted the taxi industry.
More than ten companies are racing to launch in Minneapolis by May 1, the date Uber and Lyft plan to halt operations due to the new pay rates.
Uber and Lyft argue that the rates—$1.40 per mile and 51 cents per minute—are too high and hope either the council will reconsider or state lawmakers will intervene.
These optimistic startups believe they can match or surpass Minneapolis’ minimum pay rates while offering riders and drivers a user-friendly app experience. Some even claim they can provide lower fares compared to Uber and Lyft.
While these companies lack the track record of managing the high volume of trips seen with Uber and Lyft (about 1.5 million trips a month in 2022), they are confident that without the duopoly’s control over drivers and riders, they can build a critical mass of drivers to offer reliable service to key locations such as the airport, hospital, or popular nightlife spots.
Each of these companies plans to debut in Minnesota irrespective of Uber and Lyft’s actions, capitalizing on the attention from drivers and riders seeking alternatives.
Drivers, who have long advocated for minimum rates, are now experiencing increased bargaining power since Uber and Lyft’s announcement.
Instead of competing against each other for fares, drivers will now be pursued by competing ride-hailing firms.
The rise of these alternative apps is expected to generate some initial disruption as they vie for market share, raising funds for substantial expenses like background checks, licensing fees, and commercial insurance premiums.
However, they are confident they can rapidly scale up their operations to recruit drivers and handle market demands.
