Uber announced Tuesday that it is selling its car-leasing subsidiary to Santa Monica-based tech startup Fair.com.

The move allows Uber to concentrate on its core business while still offering drivers without cars the ability to lease a vehicle for a month or more in order to drive for the ride-hailing company.

Fair.com, which launched in Los Angeles in August and earlier this month expanded to San Diego and San Francisco, will acquire the active lease portfolio of Uber's XChange Leasing through a combination of equity and debt secured during its latest funding round, the company said in a statement.

Previous reports suggested that Uber was looking to divest itself of its leasing operation due to increasing costs. Last summer, Uber said it would consider selling the business or consolidating it to serve fewer cities and make it more efficient. In December, the Wall Street Journal said Uber had reached a deal with Fair.

The XChange Leasing program allowed Uber drivers to lease cars through 14 dealerships. Approximately 40,000 cars were involved in the program. Uber has around 750,000 active drivers in the U.S.

New CEO Dara Khosrowshahi, who took over from Travis Kalanick after a series of scandals rocked the company, has said he would like Uber to go public in 2019, a move that would require the company to get its financial ducks in a row.

Previous reports suggested that Uber was looking to divest itself of its leasing operation due to increasing costs. Last summer, Uber said it would consider selling the business or consolidating it to serve fewer cities and make it more efficient. In December, the Wall Street Journal said Uber had reached a deal with Fair.

The XChange Leasing program allowed Uber drivers to lease cars through 14 dealerships. Approximately 40,000 cars were involved in the program. Uber has around 750,000 active drivers in the U.S.

New CEO Dara Khosrowshahi, who took over from Travis Kalanick after a series of scandals rocked the company, has said he would like Uber to go public in 2019, a move that would require the company to get its financial ducks in a row.