Updated Jan 8, 2022 - Economy

Rideshare 2.0: Uber and Lyft get some real competition

Image of a white Buick Enclave SUV with the Alto ride-hailing logo, outside the White House in Washington, D.C.

Alto is launching its ride-hailing service in Washington, D.C., this week. Photo: Alto

Startups like Alto, Revel and Kaptyn are positioning themselves as Rideshare 2.0. — alternatives to Uber and Lyft that use employees rather than gig workers as drivers and put fleets of company-owned cars on the road.

Why it matters: These companies' vertically integrated business models mean they can roll out electric fleets more quickly than the current market leaders, whose pledges to go electric depend on persuading gig drivers to upgrade their personal cars to EVs.

  • The newcomers also rely on a whiff of cachet: Alto, for example, which plans an all-electric fleet by the end of 2023, uses a subscription model and touts "5-Star Vehicles + 5-Star Experiences."
  • "Our drivers are employees, not contractors, which benefits them — and you," Alto boasts.

Driving the news: Alto is starting service in Washington, D.C., this week and Silicon Valley by the end of the month, with ambitious growth plans for the rest of 2022 after raising $45 million more in capital last summer.

  • Alto currently offers rides in Los Angeles, Houston, Miami and its hometown of Dallas.
  • Most of its fleet consists of Buick Enclave, Cadillac XT6 and Volkswagen Atlas SUVs, and the company plans to have more than 1,000 Altos on the road by the end of September.

What's next: The company is negotiating to buy 3,000 EVs by the end of 2023.

  • That will require installation of charging infrastructure at its maintenance depots on the outskirts of each city where it operates.

The big picture: Alto joins Revel and Kaptyn in trying to reinvent the sector by avoiding the many stumbles that have tripped up Uber and Lyft over the years.

  • By employing their own drivers and maintaining their own fleets, these companies aim to provide more consistent, reliable, safe transportation, while ensuring that drivers can earn a decent living — and the companies can make a profit.
  • Revel, which is starting up in New York City, has a fleet of all-electric Teslas.
  • Kaptyn, which operates in Las Vegas, bills itself as a private car service with a fleet of premium EVs that lets you "experience travel zen in a comfortable, zero carbon footprint ride you can feel good about."

What they're saying: "We see it as the difference between Airbnb and Westin," Alto CEO Will Coleman tells Axios.

  • "Every single Westin is the same. They treat you the same. That's what you're going to get in an Alto, no matter what city you're in."

The catch: You'll pay more to ride in an Alto, as you would to stay at a Westin hotel.

How it works: Alto members pay a monthly access fee of $12.95, or $99 a year, which includes priority status when demand is high.

  • Member fares are comparable to an Uber XL, while guest fares are about the same as the more expensive Uber Black, says Coleman.
  • "That's what's required to pay the driver fairly, to pay for a vehicle that is safe, well-maintained and clean, and to build a business that works," Coleman said.
  • Drivers can earn from $15.50 to $18.75 per hour, depending on demand, plus company-paid health insurance.

The bottom line: Your options for getting around are multiplying.

Editor's note: This story was first published on Jan. 3rd.

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