[nyghtly]

I think it's worth considering that Uber is the first nation-wide taxi service that we've ever seen, and they were only able to accomplish this via subsidy. Is it really possible to continue operation at that scale, while simultaneously losing their competitive edge versus local taxi companies? Why is it that no other taxi company has even come close to nation-wide? I don't think an app is sufficient to bridge that gap, and Uber doesn't have anything else to show in the innovation department.

[dtagames]

The three biggest reasons are centralized maintenance, fuel, and fleet costs.

Taxi companies negotiate the entire fleet purchase at one time and replace vehicles on a schedule (like rental car companies). Often, the fleet is all one brand and model. This makes it easy to hire one or two guys to work on all of them. You can also buy all your standard parts in bulk and you get commercial pricing for those. Fuel is also all bought from the same vendor on a contract.

Those agreements would be impossible for any gig worker to get. He is going to pay full price for the car, the maintenance, and the fuel. Gas stations aren't owned by oil companies; they're owned by individuals. So you'll never get national pricing on gas. Each taxi company negotiates with a particular owner (hopefully of several stations) in their area.

The final nail in the coffin (and the one that keeps it from going national, even if such agreements could be worked out for a group), is that car repair is local. You cannot operate a maintenance depot in Chicago that serves Houston. The further away the depot is from the points of service, the longer the car is out of service each time.

The "hub" nature of the taxi operation with all cars, staff, repair people, and parts in one place (and all maintained on the same schedule so fewer surprises), simply doesn't scale unless you have enough customers to build another hub.

BTW, this is the same reason there's no Del Taco in Texas (or your favorite fast food where you live). You have to have a certain number of restaurants to make the distribution hub and the truck trips worthwhile. There cannot be one isolated McDonald's somewhere that's profitable, just like there cannot be a "too small" taxi operation without a hub -- it won't be profitable. And building hubs in small cities without enough demand isn't profitable, either.

Hence, taxis don't scale.

[jacobr1]

There are plenty of national chains in various industries though, they just maintain ownership of multiple "hubs" and potentially get some economies of scale on national marketing.

There is no reason "a national taxi service" couldn't operate in the top 50 US metros, even if each metro managed local hub operations.

[neonate]

It's a good question that I don't know enough about the taxi business to answer. However, it's also a pretty general/speculative argument, so not the strongest case for "Uber can never be profitable", especially since there are general/speculative arguments on the other side too. For example: economies of scale have worked in other industries, why can't that happen here? And: software-is-eating-the-world has generally been holding true, so why would this be an exception?