Lyft is planning to increase the monthly fee that it charges to riders to $1.50 by 2020, as the ride-sharing company looks to expand into new markets.
The move will likely put pressure on ride-hailing services like Uber and Lyft to cut costs in order to stay afloat in an increasingly competitive market.
Lyft’s CEO, Anthony Levandowski, spoke at a conference in San Francisco on Wednesday and called the $1 charge an “essential component of our business model.”
Lyft says that it will also increase the rate at which ridership grows with the cost of driverless vehicles.
The company says that the change will make Lyft more competitive in the ride share economy, where it competes with other ride-share services like Ola and Grab.
Uber, Lyft’s biggest competitor, has also announced plans to charge more drivers to make up for a lack of competition.
Levandowski says that Lyft is committed to continuing to build on its success in its markets, and the new fee will help support that growth.
Lyft says the fee change will be rolled out over the course of 2020, and it will apply to its full-service carpool and shuttle services, as well as its ride-in-demand business.
The change will also apply to ridesharing in the company’s larger cities, which Lyft will continue to operate for at least the next five years.
Lyft will pay $2 for every ride in 2021 and $2.50 in 2021 for rideshare services in its remaining markets.
Levandos comments came days after Lyft revealed that its global average rideshare rate increased to $4.85 per rider, up from $3.80.
The increase came on top of Lyft’s earlier announcement that it plans to raise additional capital by the end of 2021.
Lyft currently has $11 billion in its coffers.