Uber employees are expecting a round of layoffs to happen anytime soon following reports that the startup's car leasing service is losing a huge amount of money.
Sources have tipped The Wall Street Journal (WSJ) that employees are "nervous" after speculations that Uber is considering the shutdown of its car leasing subsidiary, Xchange, which is currently manned by around 500 people. Uber's former chief executive Travis Kalanick established Xchange in July 2015 in hopes to sign up more drivers by lending them brand-new or used cars.
Uber is reportedly losing much more from Xchange than expected. A WSJ report states that the ride hailing company's expected loss allowance is US$500 per car, which is 18 times smaller than the actual US$9,000 loss per vehicle.
As of the moment, around 40,000 vehicles are being leased under the program which is way too far from the envisioned 100,000 cars during its launch.
Uber is now looking for a buyer or partner for Xchange. If it does not pan out, the management will be forced to drop the car leasing service and lay off employees as a result. Nevertheless, some of these employees could be given a reassignment within Uber, but as to the number that could be saved remains in question.
Uber has not responded to a request for comment.
In 2016, the company lost a total of US$2.8b and a huge part of it was rooted to Xchange. Earlier this year, Kalanick stepped down amid the backlash caused by various controversies involving Uber, including alleged sexual misconduct committed by male executives, the company's misogynistic work environment, renting out faulty cars, use of Greyball app to avoid authorities, snooping around Apple's privacy guidelines and patent violations and trade secrets theft.