Insight: Uber, Lyft want more public subsidies to meet California EV mandates

Evs SA

12/05/2021 12:00

By Tina Bellon
    May 12 (Reuters) - California clean-air regulators want
nearly all trips on Uber and Lyft ride-hailing platforms to be
in electric vehicles, mandating costly measures that the
companies call unrealistic without more public subsidies for
EVs.
    The proposed rules by the California Air Resources Board
(CARB), expected to pass on May 20, mandate that EVs account for
90% of ride-hailing vehicle miles traveled by 2030. That's a
lesser goal than the companies themselves have set: Both Uber
 UBER.N  and Lyft  LYFT.O  recently committed to convert their
U.S. fleets entirely to EVs by that year.
    Graphic on CARB electric-vehicle goals: https://tmsnrt.rs/3u5EVaq
    And yet the firms are pushing back on the CARB effort to
force the transition, arguing taxpayers should shoulder much of
the burden.
    The total cost of meeting the state's 2030 standard could
reach $1.73 billion, even when government subsidies and
projected declines in electric-vehicle costs are considered,
according to the Union of Concerned Scientists, a nonprofit
research and advocacy organization that projected the
transition's total cost at Reuters' request.
    California and the ride-hail duopoly are on a collision
course less than a year after the companies won a battle against
the state to maintain their drivers' status as independent
contractors, rather than employees.  urn:newsml:reuters.com:*:nL1N2HP1R8
    The firms' business models pose among the biggest obstacles
to converting their fleets to EVs. Their drivers own their cars
and work as much or as little as they please. Even those working
full-time don't make enough to justify the higher upfront costs
of EVs.
    "You'd need to pay off my car ... and then give me
incentives to make it worthwhile for me for be on a new payment
program," said Daniel Russell, who drove for Uber and Lyft in
Los Angeles before the pandemic.
    Most drivers buy used vehicles, Russell said, and many have
poor credit that forces them into expensive car loans.
    Uber and Lyft say they can't afford the EV transition
either. Uber said in a December letter to CARB that, without
"sufficient" subsidies, the rule would unduly burden the
companies, along with their drivers and consumers.
    "No one government nor single company ... can bear the full
cost of a rapid transition alone," Uber said in a statement to
Reuters. Lyft said in a statement that taxpayers should finance
the transition because current government subsidies are only
sufficient to make EVs affordable for "typically high-income
white homeowners," while most California Lyft drivers are
lower-income minorities.
    Neither company has reported a profit after a decade in
business, but both generate billions of dollars in revenue and
are publicly traded. Uber is valued at about $86 billion; Lyft
is worth about $16 billion.
    Joshua Cunningham, chief of CARB's sustainable transport
staff, said the agency supports more subsidies for lower-income
drivers but that, regardless, Uber and Lyft can handle the
transition CARB is mandating. The electrification targets, he
said, are aggressive but feasible.
    Graphic on CARB emission goals: https://tmsnrt.rs/2QDFNV6
    California State Senator Nancy Skinner - who introduced the
2018 law on which the CARB regulations are based - said the
companies should pay most of the cost for fleet conversion
because their businesses have increased carbon emissions.
    "It's because of them that these vehicles are driving
additional miles and making additional trips," she said.
    
    LONG ROAD AHEAD
    The debate will test the ride-hailing firms long-stated
commitment to carbon reductions. Uber and Lyft have claimed
their businesses would reduce climate damage by decreasing
traffic and providing an alternative to private car ownership.
But several studies have found that, by contrast, private car
ownership has grown slightly in recent years and that the
ride-hailing fleets have worsened urban traffic congestion. Uber
and Lyft say their impact on traffic is small, citing a study
they commissioned.
    Uber and Lyft cited existing partnerships with rental
companies and charging station providers to lower drivers' EV
costs and said they are seeking similar arrangements with
automakers. Uber last week announced a partnership with British
electric van and bus maker Arrival  ARVL.O  to develop a car for
European drivers on ride-hailing platforms.  urn:newsml:reuters.com:*:nL8N2DU5X2
 urn:newsml:reuters.com:*:nL1N2MN0YY
    Uber has also said it will invest $800 million globally
through 2025 to help drivers globally switch to EVs. But that's
a drop in the ocean of money needed to convert the about five
million drivers on its platform as of February 2020.
    California currently offers some of the most generous U.S.
EV subsidies and has said it will end the sale of new combustion
engine vehicles by 2035. But battery electric cars only
accounted for 1.3% of the state's 2020 light-duty vehicle fleet
and 6.2% of all new 2020 vehicle sales, according to
California's Energy Commission.
    Ride-hailing trips currently make up just 1.2% of all
passenger vehicle miles traveled in California. But drivers for
ride-hailing firms produce more pollution per passenger-mile
traveled because they spend more than a third of their time
cruising without riders and only rarely carry multiple riders,
according to CARB. Researchers generally assume that
electrifying one ride-hail vehicle reduces the same amount of
CO2 as converting three regular gas-powered passenger vehicles
to EVs.
    Some Uber and Lyft vehicles produce a lot more pollution
than others, however. CARB has suggested the companies could
meet its 2030 goals for electric vehicle-miles by converting
less than half of their fleets - if they focus on full-time
drivers who travel more miles.
    
    FOUR CENTS PER MILE
    Despite the high upfront costs of converting California
ride-hailing fleets to electric cars, the transition would only
cost Uber and Lyft an extra four cents per mile traveled by
their drivers between now and 2030, according to Elizabeth
Irvin, a senior transportation analyst at the Union of Concerned
Scientists. Drivers would save $1.1 billion in lower maintenance
costs and fuel savings over the same time period, the
organization estimates.
    CARB's proposed legislation would allow the companies ways
other than adding EVs to meet carbon reduction goals. But those
efforts pose their own challenges.
    The rules would award the firms credit for building bike
lanes and connecting riders to public transit by allowing them
to buy tickets through their apps. Such efforts, however, will
be complicated by California's fragmented transit systems.
Regulators also suggest the companies could cut emissions by
limiting miles traveled while cruising without riders, but that
would undercut their efforts to keep prices and wait-times low.
The companies could also increase car-pooled trips with multiple
riders, but they have long tried that with little success.
    Those strategies are not likely to help much in meeting
CARB's emissions reduction goal, Lyft said in a statement,
encouraging the agency to focus instead on electric-car
incentives.
    Such subsidy programs, regardless of who pays for them, are
difficult to design for drivers who are independent contractors.
    If Uber and Lyft helped pay for their drivers to buy EVs,
for instance, they have no way under their current business
models to ensure their freelance drivers continue working for
them. And drivers have few avenues to resist being saddled with
the extra costs of electrification mandates on the companies.
 urn:newsml:reuters.com:*:nL8N2FN59J
    Most EVs are bought now by higher-income people who purchase
and install chargers in homes they own. Uber and Lyft drivers
are the opposite: Renters with limited income and no access to
home chargers, leaving them dependent on costly public chargers.
    Lower-income drivers cannot - and should not - bear the
costs of the EV transition, said Irvin, of the Union of
Concerned Scientists.
    "It's really important that the companies pay the upfront
costs, not the drivers," Irvin said. "After all, this rulemaking
process is only holding the companies accountable for promises
they've already made."
    

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California's aggressive targets to electrify Uber, Lyft    https://tmsnrt.rs/3dZDiFu
California wants Uber, Lyft to eliminate CO2 emissions    https://tmsnrt.rs/32U6png
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Reporting by Tina Bellon in Austin, Texas; editing by Joe
White and Brian Thevenot)
 ((Tina.Bellon@thomsonreuters.com; +1 646 573 5029; Reuters
Messaging: tina.bellon.thomsonreuters@reuters.net; Twitter
@TinaBellon))