Feb 21, 2024 - Business

Uber, Lyft rival Alto shrinks and abandons all-EV plan

Image of an Alto ride-hailing vehicle driving past the White House in Washington, D.C.

Alto has suspended ride-hailing in Washington, D.C., and Miami. Photo courtesy of Alto

Alto, an employee-based ride-hailing company that offers an upscale alternative to Uber and Lyft, is suspending operations in Washington, D.C., and Miami.

  • It's also killing plans for an all-electric fleet, at least for now.

Why it matters: The pullout from two of the five cities where Alto operates underscores the challenge of competing against the industry behemoths, and highlights the still-difficult economics of electric vehicles.

  • For residents of D.C. and Miami, it also means one less transportation option.

Driving the news: Alto ceased operations last weekend in D.C., and will wind down in Miami by mid-April, CEO Will Coleman tells Axios.

  • About 300 full- and part-time drivers are being laid off as a result.

Details: Coleman said the tight market for investment capital drove the company's decision.

  • "We were seeing really strong performance in both those markets and were tracking ahead of our projections. But we just are worried about capital availability and that's limiting our ability to invest in growth."
  • Alto has raised $120 million since its founding in 2018.

Of note: Alto, which last year pulled out of San Francisco, says it will continue operating in Los Angeles, Houston and its home market of Dallas, where it is already profitable.

Between the lines: Two years ago, Alto announced a plan to become "the nation's first vertically integrated 100% electric ride-hail fleet with over 3,000 electric vehicles (EVs) by the end of 2023."

  • That never happened, as the company confronted the same market realities as the much-larger Hertz — which recently said it will sell roughly a third of its global EV fleet, citing high repair costs and weak demand.

The big picture: Alto differentiates itself from Uber and Lyft by vetting and training employee drivers instead of relying on gig workers. It also owns and operates a company fleet of premium vehicles.

  • That enables it to offer a consistently safe and elevated experience, Coleman says.

Yes, but: A premium experience costs more, which is why Alto fares are about 50% higher than the typical Uber ride. (They're still about 30% less than an Uber Black limo ride, Coleman notes.)

What to watch: Coleman, who remains bullish on the employee driver business model, tells Axios the company will wait another year or two before trying to raise investment capital again.

  • "We want to be back" in D.C. and Miami, he says.
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