The Uber car service app has slashed its fare prices by 20 percent in New York City, in a move that will see it become cheaper than riding the city's famed yellow cabs.

The price cut marks Uber's ongoing strategy of using price competition to increase its share in the car service market. The company had already decreased prices in San Francisco, Los Angeles and a few other cities.

The lowered prices will only be applied to uberX, which is the company's least expensive category for car services. The duration for the lowered prices, while stated as only available for a limited time, will depend on how much demand the car service company generates from the move.

"The more users capitalize on the savings, the more likely we'll keep prices this low," said Josh Mohrer, general manager of Uber.

As stated in a blog post by Uber, lower fares will also be beneficial for its drivers. With lower fares, there will be more demand, translating to lower pickup times and more trips per hour, creating a better economic situation for Uber drivers.

"What does what mean in the long run? They'll be making more than ever!" the blog post said, referring to the earning potential of the company's drivers.

While Uber's strategy is largely seen as a huge hit to the taxi cabs of New York City, New York Taxi Workers Alliance executive director Bhairavi Desai thinks that the company has not yet made a drastic impact on the city's taxi business. As per Desai, the sector that has been largely affected by Uber's presence is limousine companies, as Uber also has a category of luxury cars for hire.

"It's really affected the black car industry," said Desai, who adds that the customers of traditional limousine rental companies are switching to Uber.

Uber is able to afford such a drastic price cut in one of the busiest cities in the world for taxi cabs due to a recently completed round of venture capital raising that netted the company $1.2 billion, making it the most valuable startup company in the world with a value of $18.2 billion.

Uber is currently facing litigation in Maryland as more than 30 taxi companies are claiming that the company's automated pricing based on demand is akin to price-fixing. Furthermore, the group is saying that Uber's non-compliance with the regulations that are followed by traditional taxi companies gives the company an unfair advantage over them.