[SilasX]

Margins are also about prices, not just expenses. Depending on the shape of the demand curve for Uber-like services vs traditional taxis, they may be able to pass along a lot of that cost to customers -- assuming similar competitors would also face the new cost structure.

Anecdotally, Lyft/Uber are so much better that they could charge me a lot more and still be preferable, though obviously they expect the margins would be smaller. I doubt it would be business-model-killing smaller though.