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Popular Car Rental Service for Uber and Lyft Drivers Suspends Operations

July 21, 2016, 12:17 PM UTC
Photograph by Al Seib — LA Times via Getty Images

Breeze, a San Francisco startup that leases cars to drivers for Uber, Lyft, and delivery services, has suspended its service, according to the company’s website.

Born ZephyrCar in late 2013, Breeze’s business model was to lease out cars, by the week, to people who want to work for ride-hailing or delivery services like Instacart and Postmates. Starting in San Francisco, the startup eventually expanded to a total of six U.S. markets, including Los Angeles, Seattle, and Boston.

However, it appears that after more than two years, the company’s car leasing service has hit a wall.

“Due to recent business developments and broader market trends, we at Breeze have made the difficult decision to suspend our car leasing program,” a message on its website’s home page reads. The company is no longer accepting new customers, but current ones will remain unaffected.

Instead, Breeze is now shifting its focus on the car fleet management software it built to operate its service, and will license it out to other companies, Breeze told Fortune in a statement via email. The company plans to make layoffs as part of this shift, it said.

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“The auto space is barely recognizable from when Breeze launched two years ago,” co-founder and CEO Ned Ryan said in a statement sent to Fortune. “With the rapid development of shared vehicles and autonomous technology, it has become clear to Breeze that the best value we can provide to the industry is through our fleet management software.”

When Breeze began operating, ride-hailing services like Sidecar, Lyft, and UberX, which involve regular people ferrying passengers using their own cars, were relatively new. Lyft and the now-defunct Sidecar launched in the summer of 2012, with UberX, Uber’s version of the service, following later that year. For Breeze’s co-founders, two of whom had previously worked at Uber and cleaning startup Homejoy, it was the perfect opportunity: Help the companies recruit more drivers by renting cars to folks without one.

Eventually, both Uber and Lyft debuted their own programs for leasing and renting out cars to their drivers, likely taking away a lot of Breeze’s business. Today, Uber offers both longer term car leases as well as short-term rentals through partnerships with car rental companies Hertz (HTZ) and Enterprise. Lyft inked a deal with Hertz last year, and in early 2016, General Motors (GM) began offering rental cars to Lyft drivers as part of its investment in and partnership with the ride-hailing company. Competing services like HyreCar and Evercar also sprouted up.

For more on the partnerships, watch:

It’s still unclear what exactly prompted Breeze’s decision to abandon its car lease service, though the language of its goodbye message and Ryan’s statement hints it was likely due to difficulties sustaining the business. Just a week ago, Ryan penned a column for tech news blog TechCrunch about the future of car ownership, in which he points out the immense role of financing in today’s car market and the changing car ownership models.

Breeze was founded by Ryan Jeffrey Pang and Charlie Fang. The company was initially bootstrapped, though it eventually raised an undisclosed amount from Mark Cuban in 2014. According to startup database CrunchBase, Breeze has raised a total of $12.7 million. Pang left the company in the fall of 2015, according to his LinkedIn profile.

The story has been updated with additional information and statements from Breeze.