Upscale Rideshare Platform Abandons Commitment To All-Electric Fleet After Missing Mark

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Will Kessler Contributor
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Alto, an app-based ride service that positions itself as an upscale option to Uber or Lyft, is cutting back operations and abandoning current goals to have an all-electric fleet, according to Axios.

The company will no longer operate in Washington, D.C., or Miami after pulling out of San Francisco last year, leaving only five cities that the service will be operating in, according to Axios. Following difficulties with the costs of electric vehicles, the service will have to abandon plans for an all-electric fleet that was announced two years ago and was supposed to be completed by the end of 2023. (RELATED: Biden Admin Reportedly Set To Greenlight Rule Change That Could Spike Gas Prices — But Not Until After The Election)

“We were seeing really strong performance in both those markets and were tracking ahead of our projections,” Will Coleman, Alto CEO, told Axios. “But we just are worried about capital availability and that’s limiting our ability to invest in growth.”

As a result of the company scaling back operations, around 300 full- and part-time drivers will be laid off, according to Axios. Alto has so far raised $120 million in investment since it was founded in 2018.

Alto differs from other rideshare companies like Lyft and Uber in that it treats drivers as employees, giving them training and background checks, rather than like contractors. Rideshare companies that employ drivers as independent contractors could see their profits harmed by a labor rule change taking effect in March that would reclassify which workers get employee benefits.

Ridesharing apps have historically struggled to reach profitability, with Uber recently announcing its first profitable quarter since it went public in 2019, according to the Wall Street Journal. Lyft projects that it will become profitable sometime this year.

Alto rides are typically 50% more expensive than an Uber ride, but around 30% less costly than Uber’s premium black limo ride option, according to Axios. Alto is currently only profitable in its home market of Dallas.

EV sales have continued to slump over the past year, as costs remain far above those of traditional gas-powered vehicles despite huge subsidies put in place by the Biden administration. The total market share of EVs rose from 3.1% in January 2023 to 3.6% in December 2023, while the share of U.S. vehicle inventory grew from 2.8% to 5.7% in that same time.

Alto did not immediately respond to a request to comment from the Daily Caller News Foundation.

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