For more than a decade California has pushed automakers to green their lineups by selling zero-emission vehicles to aid its fight against pollution and greenhouse gases. But as more people opt for on-demand ride services rather than driving themselves, it was only a matter of time before state officials targeted Uber and Lyft fleets to reduce emissions.
A bill wending its way through the State Senate would mandate that starting in 2023, 20% of miles traveled by ride-hailing services be in zero-emission vehicles (i.e., electrics), rising to 50% by 2026. By 2030, 100% of vehicles purchased, leased or contracted by the services would have to be ZEVs. Dubbed E-CAr, or Electrify California Ride-hailing, the bill went to Senate Appropriations for review this week after clearing two other committees in April. If approved to move forward, it must then pass both houses of the legislature and be signed by the governor to become law.
"It makes the most sense to focus on those cars that are going to be on the road the most," the bill's author, state Sen. Nancy Skinner, told Forbes. "It doesn't necessarily make sense to have all of our electric vehicles be somebody's second or third vehicle that's mostly just parked in their garage."
Given the scale of Uber and Lyft's networks in California, the most populous U.S. state, Skinner's bill could have a major impact on the national electric vehicle market. In 2017 a total of 199,826 electric vehicles were sold nationwide, with California accounting for nearly half. Uber and Lyft currently have more than 200,0000 drivers on their platforms in the Golden State, suggesting a huge potential market.
For the E-CAr plan to work effectively, however, it will need incentives to encourage Uber, Lyft, automakers and drivers to switch from gasoline to batteries. That’s because EVs typically cost at least $10,000 more than equivalent gasoline-powered vehicles, a cost that has to be borne by the drivers, not the companies.
“The cars are not actually owned by Uber or Lyft, so the challenge is how do you operationalize those rules? That's part of the problem,” said Dan Sperling, director of the Institute of Transportation Studies at the University of California, Davis and a member of the California Air Resources Board, which created and oversees the state’s ZEV program. For the legislation to work as intended, incentives are needed to encourage large-scale adoption of EVs by people driving for rideshare companies, including discounted lease and purchase programs from automakers, he said.
“The car companies are saying one of the conditions they'd like to see is, with regard to greenhouse gas standards, that they get extra credit if the vehicles are used as autonomous or shared vehicles,” Sperling told Forbes. “At least in California, we're all for that. … That’s the kind of the thing that is likely to get into that negotiation.”
At the moment, Uber’s position on the legislation is “neutral,” according to a company spokesman. Rival Lyft is somewhat more anxious.
“Our concern with this bill is the impact it would have on Lyft drivers, the vast majority of whom drive part-time as a way to supplement income and support their families,” said spokesman Adrian Durbin. “We are engaging with the sponsor of this legislation to find ways to prioritize infrastructure development and incentivize EVs."
At the same time, Lyft favors “displacing gasoline-powered vehicles and moving towards electric vehicles powered by renewable energy,” he said. “We doubled down on that goal by committing to offset carbon emissions for all Lyft rides indefinitely, thereby building into our business a strong financial incentive to move away from gasoline-powered vehicles.”
California Governor Jerry Brown has set a goal of getting 5 million EVs on state roads by 2030, and the state has earmarked funds to subsidize vehicle purchases as well as for charging infrastructure.
Range is also an issue, as drivers need vehicles that can reliably go 150 miles or more between charges and be repowered rapidly. For now, about the only viable options are General Motors’ Chevrolet Bolt hatchback, with an EPA range of 238 miles per charge and a base price of $37,495—before federal and state incentives that knock off $10,000—and Nissan's new 151-mile range Leaf, priced from $29,990 before incentives. Should Tesla eventually unsnarl its Model 3 production and actually build a base version of the sedan priced at $35,000 before incentives, its 220-mile range could make it a candidate for TNC service.
Regardless, dozens of new EV models are heading to market from every major automaker over the next two to three years, and battery prices and performance keep getting better. A large, dedicated source of demand for lower-priced EVs might also appeal to some manufacturers.
Along with arranging discounted lease and finance deals for rideshare drivers, GM’s Maven car-share unit is already experimenting with a business that could be a model for more electric Uber and Lyft trips. Its Maven Gig program leases Bolts by the week for people who want to drive for rideshare and on-demand delivery services but lack a car. Vehicles are stored at charging stations, and drivers don’t have to pay for fuel, but the rental charge of $229 per week is probably too high, Sperling said.
“You've got to bring the price down a little, but if we created those incentives for automakers, where they got extra credit, I think they might be more willing to do that,” he said.
California requires carmakers to sell specific numbers of zero-emission vehicles annually, each of which gets a specific number of credits. If they sell too few or don’t have ZEVs in their model lines, carmakers can buy credits from companies like Tesla that generate a surplus of them so a credit multiplier for rideshare EVs could be appealing.
Getting more EVs into rideshare fleets in dense urban areas would magnify their emissions impact since Uber and Lyft drivers ferry dozens of passengers daily, versus single trips taken by individual owners.
Given its scale, a commitment by Uber to get large numbers of electric vehicles of its network would trigger the kind of broad-based industry and government reaction taking shape with its plans for an air-taxi service in the 2020s, said Pasquale Romano, president and CEO of ChargePoint, which says it operates the world’s largest EV charging network.
“If they lean into this and do it in California, it will cause a whole bunch of ecosystem players, ChargePoint, the utilities, automakers, regulators, CARB, the California Public Utilities Commission, all to come off the sidelines and say, 'okay, what do we need to change, what do we need to do to make this work?” he said. "Every good offense is a good defense. Go in and say, ‘Okay, I'm going to be completely into this. We’re going to clean up the fleet incrementally, we're not going to be able to do this overnight, but we’ll commit to doing it in steps.’”