If you use Express Drive to drive for Lyft a trip to the airport will now pay you around $7 instead of $10. In early May, Lyft notified drivers nationwide who rent Lyft vehicles through Lyft’s Express Drive program that they would begin to earn their fares at a lower rate. Renter’s now earn around $0.405 per mile compared to the $0.585 per mile that other drivers receive when using their own car. This lower rate of pay is in addition to the roughly $200 per week that Lyft’s Express Drive charges to rent each vehicle.
When asked why Lyft was lowering paying for Express Drivers, A Lyft spokesperson said “Express Drive provides an opportunity to earn money without needing to own a vehicle – and without a long-term commitment. Due to increased accident insurance costs, the per mile rate for Express Drive vehicles will be decreasing by an average of 11 cents. We continue to be focused on building products that empower drivers to get the most out of driving with Lyft.”
Lyft says that the latest pay cut has been put in place to cover “increased accident insurance costs” associated with the rental pool. Indicating that Lyft’s Express Drive program may be losing Lyft a decent chunk of cash each quarter. As Lyft moves to stymie losses as a public company it appears that Express Drive has fallen into the sights of accountants at Lyft.
The Ridehail vehicle rental industry has always been a tough proposition. As of now, there are already three failed short-term ridehail vehicle companies; Evercar, Breeze, and Xchange Leasing. All of which have gone bust, except for Xchange Leasing; which was sold by Uber to a car rental startup called Fair in late 2017. Uber was said to be losing $9000 per vehicle at the time.
Lyft Makes No Mention Of These Lower Pay Rates To Prospective Renters On Their Landing Page
It seems almost impossible for a prospective new driver visiting Lyft to learn that they will get paid less than other drivers by signing up for Express Drive.
A quick trip to Lyft’s Express Drive page on May 16th showed zero mention of lower pay rates. The Terms of Service had no mention of lower pay rates with Express Drive. I looked deeper on Lyft’s site and found nothing.
A look at the driver app on my mobile device yielded no results either. I clicked on the “Express Drive” button in the Lyft Driver app, checked the terms & conditions, signed a background check waiver, read through the rental agreement contract, and made it as far as scheduling my appointment to pickup my “rental” next week.
Nowhere in this process was it made clear that I would be getting paid less if I signed up for Express Drive. So how is someone who is new to this supposed to know?
This seems incredibly deceptive to me because anyone doing their research on getting into ridehail driving will want to know if they are getting paid less than other drivers. Imagine that you signed up for this, paid the $200, the deposit, got into a car, drove for several weeks or months, AND THEN you learned that you are getting paid less than everyone else!
But that’s not who this landing page is targeting isn’t it? It’s hoping people won’t do their research and that they will go with what appears to be a good deal; you can even pay zero per week (excluding taxes and fees) for this car. All you have to do is give 150 rides!
The Difference In Pay For Using Express Drive Is Significant
Looking at this example rate card from Sacramento CA below, we also see that Lyft can choose to pay a different Base Rate, Minimum Rate, and Per Minute rate in addition to the now different per-mile rate. Lyft has left his open as an option in the future. Right now they have only altered per-mile pay.
However, it’s probably only a matter of time until they do because Lyft is under a lot of pressure to become profitable now that they are a public company; meaning they have a lower appetite for loss-centers like Express Drive. Maybe at this point it would be better to kill the program.
How Much Of A Difference Does This Pay Cut Make In The Real World?
I ran a sample trip through the rate cards used to calculate driver pay for Sacramento CA. Using theoretical trip from Downtown Sacramento to the Sacramento International Airport at 7PM on a Wednesday and Google Maps estimated a travel duration of 13 minutes at 10.5 miles.
Here are the two trips compared:
|Quantity||Rates ($)||Part of Fare|
|Quantity||Rates ($)||Part of Fare|
With Express Drive, the driver will earn $7.16 for our sample trip instead of $9.05. That may seem like a small difference at first, but it’s also a difference of -20.88% in take-home pay. Nothing to laugh at when your pay is already kind of low and you might owe Lyft ~200 for your rental next week.
What Is The Point Of Express Drive Now?
I can’t think of a scenario where using Express Drive makes sense for anyone. You can easily get a better short-term deal through Fair, Maven, or maybe even HyreCar. These options won’t lock you into a single platform, are often cheaper, have “Rental Rewards” programs of their own that are better (in the case of Fair), and the none of them PAY YOU LESS.
Express Drive seems to be hemorrhaging money for Lyft. Enough so that they have made the unsavory move of taking more money from those who use their rental vehicles. So it’s not like Lyft is making friends of the people who use Express Drive for the long term.
And all Lyft can do to keep this thing alive right now is eat the loss for all of the cars (unlikely) or cut into the pay of drivers, making them even angrier at Lyft. Hurting any goodwill they hope to achieve.
A lot of very smart people at Lyft, Uber, Breeze, Evercar, Xchange Leasing, Fair, Hertz, Getaround, and other characters have tried to make ridehail rental businesses work. All of them seem to be failing fast and hard; dead in 2 years.
Maybe the failed unit economics of these ridehail rental businesses are just a broader sign of the failed unit economics of this business in general. A casualty to the consequences of the low-pay and maintenance reality of driving a new car “150 rides a week” for free.
PS: You cannot take the IRS Standard Mileage Deduction when you rent a car for ridehail driving. This does not count as tax advice and I am not a tax advisor.
What’s 40% of $20,000 tho?