Uber needs drivers. It wants to throw your money at the problem

Uber is shifting spending from rider discounts to incentives for drivers to work more.

Sebastian Gollnow/picture alliance via Getty Images

• Uber is trying to lure drivers to work more on its app.
• From the US to India, the company is spending more on driver incentives, CEO Dara Khosrowshahi said.
• It's a challenge that Uber has not faced since the end of the pandemic.

Uber needs drivers, which means some riders will be shelling out more cash.

In the US and abroad, the ride-hailing and delivery service is spending money to coax drivers to take more trips and deliveries, CEO Dara Khosrowshahi said on the company's third-quarter earnings call on Wednesday. Rider prices might even increase as a result.

That's a change from last year, when Uber was spending more to attract more customers to use its app, Khosrowshahi said.

"This year, we're taking down rider incentives, and we're using those dollars to fund driver incentives," he said on the call.

The shift in spending "does mean sometimes higher prices for riders, which is something that we watch out for," Khosrowshahi added.

Uber has not faced a driver shortage this bad in years. The last time that the company talked about increasing spending on extra payments for drivers was in 2021, when it faced a driver shortfall after the pandemic forced many gig workers to stay off the road.

Since then, many drivers have faced lower pay after accounting for their expenses. Riders, meanwhile, have contended with higher per-mile fares and longer wait times on Uber, according to a study published in September.

Uber has offered some US drivers hundreds in incentive payments this fall ahead of the busy holiday season, Business Insider reported last month.

The problem is broader than the US, though, executives said on Wednesday's call.

Uber is also investing in attracting more delivery workers to its Uber Eats business, Khosrowshahi said.

And both drivers and customers in emerging markets such as Brazil and India are being squeezed by higher fuel prices, CFO Balaji Krishnamurthy said. Fuel prices have spiked in the months since the US and Israel started a war with Iran. Uber is spending on incentives for drivers in those markets, too, Khosrowshahi said.

AI is deciding exactly how and where Uber spends its incentive money, Khosrowshahi said.

Uber's algorithms are trained on "billions of trips" and make decisions "that humans just can't," he said.

"If you have a dollar, what is the maximum predicted return for that dollar?" Khosrowshahi said.

"The algorithms are making these choices," he added.

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