In San Francisco and New York on Wednesday, Uber will start to give customers the option of choosing a hybrid car at a price that it says will be 10 to 25 percent more than a taxi. That compares with the 40 to 100 percent premium that customers pay for a black town car.
“This is the first big step Uber is taking to go to the masses,” said Travis Kalanick, the company’s chief executive.
Uber, which has raised $43 million from investors since 2011, is one of several start-ups, including Cabulous and Taxi Magic, that are trying to profit by connecting drivers and passengers more efficiently.
Its software tries to predict areas where rides are likely to be in high demand at different times of day. This information appears on a driver’s smartphone so that he can know where to linger and, ideally, pick up customers within minutes of a request for a ride. Uber does not itself provide the cars; it works up with existing for-hire car services that piggyback on its technology and give it a cut of fares.
Uber can come in handy in cities or neighborhoods where cabs are hard to flag down on the street. But cities often have decades-old regulations regarding car services acting as taxis, and officials in some cities, including Washington, say they are concerned about Uber confusing riders or breaking the rules.
Of course, Uber’s convenience comes with a cost. People are paying not just for the service, but also the gas used by the big sedans. That’s where hybrid vehicles will help bring down the price: drivers will spend less time and money fueling up.
The company plans to expand its offering of hybrid cars to other cities in the coming months. Uber is now operating in about a dozen cities, including Los Angeles, Chicago, Boston, San Diego, Paris and London.
When people use the Uber app in San Francisco and New York, they will be able to choose between a town car and a hybrid. In most cities, the company is also adding the option to hire an S.U.V. for larger groups. Rates will vary from city to city, but in general hybrids will cost 30 to 40 percent less than Uber’s black town cars, according to Scott Munro, an operations manager at Uber.
In San Francisco, for example, the hybrid cars will cost $5 for the base fee, and then $3.25 a mile after that. By contrast, the town cars cost $8 for the base fee and then $4.95 a mile. Taxis in San Francisco cost $3.16 a mile including a tip of 15 percent.
Despite its higher fares, Uber has grown significantly. The company declined to disclose precise numbers, but Mr. Kalanick said it had recorded 20 to 30 percent revenue growth from month to month over the last year, and that there were thousands of cars using Uber’s technology. In San Francisco, 400 drivers are signed up with Uber, and that number is growing all the time, Mr. Munro said.
The company convinced its car-service partners to buy a total of 50 hybrids just for customers coming through Uber — a sign that drivers are making money with the start-up.
Mohamed Mandour, a partner of Uber who owns a car service called Nada Limo in San Francisco, bought a Toyota Prius hybrid for the new program. He said his passengers were interested in taking the hybrid cars, even though they are less roomy and luxurious, because of the lower fares.
Mr. Mandour said that when he drove cabs for nine years, he would make only about $300 on a busy 10-hour shift. But when he worked with Uber, the amount he earned jumped to more than $700 on a good day, he said. “I hope the new idea will work, because then we’ll be taking over the whole Bay Area,” Mr. Mandour said.
The cab commission of the District of Columbia is less thrilled: it is in the midst of a legal tussle with Uber. Ron M. Linton, chairman of the commission, said Uber had begun operating in the city without its approval.
He said that under the commission’s rules, there are limousines, which set a price with passengers in advance, and there are cabs, which have meters that charge by time or distance. He said Uber was breaking the rules by trying to be both. Uber calculates fares by time and distance, and then bills the customers’ credit card.
The commission’s inspectors have been citing Uber’s car-service partners for infractions, Mr. Linton said. The commission is proposing to change the district’s taxi laws to strengthen regulation of sedans like the ones that Uber’s partners use. Mr. Linton said this would allow it to protect consumers from issues like extra fees that they don’t understand.
“There’s room for limos, for taxis and this new concept for sedans,” he said. “We’re trying to make it work for everybody, but we need cooperation. We can’t deal with an organization that sticks its thumb up our nose.”
Mr. Kalanick of Uber said its operations in Washington were completely legal, and that the commission was citing rules that don’t exist. He said the commission wanted to regulate sedans more tightly so that it could control their fares, which would prevent Uber from eventually undercutting cabs.
“They want to keep our prices from going down, which is a very unusual price-fixing scheme,” Mr. Kalanick said. “Essentially they’re trying to protect taxis from competition, from having any viable alternative.”
New York doesn’t seem to have a problem with Uber. Allan Fromberg, a spokesman for the city’s taxi and limousine commission, said that as long as services like Uber conformed to the city’s rules, “we are highly supportive of ways to use technology to enhance service to the riding public.”
In Boston, Uber is shaking things up in other ways. Starting Wednesday, customers there will have the option to request stretch limos. And soon they will be able to summon an ice cream truck.
“You’d have ice cream on demand,” Mr. Kalanick said. “It’s kind of fun. That’s part of how we roll.”
Jenna Wortham contributed reporting.