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⚡ Revel Expands to Brooklyn, Analysis Implies Commonwealth FHV Corporation Acquisition
Revel's NYC ridehailing expansion to Brooklyn seems to reveal the company may have acquired a large FHV Corporation belonging to established luxury limo operator Commonwealth Worldwide
⚠️ AutoMarketplace.com Note: Starting from 9:27 is where the commentary gets specific and interesting. ⚠️
AutoMarketplace.com NYC covers the for-hire transportation industry and automotive news. Check out AutoMarketplace.com on YouTube ▶️
We recently did an analysis on NYC EV ridehailing service Revel. The analysis indicated that it was still only running its company-owned all-Tesla Model Y service with the ~50 vehicles it "TLC-plated" before the EV exemption to the FHV License Pause (aka ‘TLC Plate Cap’) was removed in June 2021👇.
So, it was surprising to us when the Company announced an expansion into Brooklyn with a Teslarati article further reporting that the company employed over 400 drivers 🤔 Firstly, that’s great to see a new company expand 👏👏, but it also left us wondering how they were expanding? We looked into the data, starting with base dispatch information (available on NYC Open Data to April 2022 currently), to see if something changed since our Revel analysis three months ago. Well something had changed (!), which provides an explanation to Revel’s continued NYC expansion.
‘Unique Vehicle Dispatches’ 📲, or how many unique vehicles Revel’s NYC TLC base dispatches, suddenly increased beyond its initial ~50 vehicle fleet beginning in March 2022. We only have base dispatch data until April via NYC Open Data, but the increase was rapid, going up to 56 in March and then 71 in April! When we saw this, we then searched vehicles affiliated with Revel’s base (B03380) to realize that there were more cars affiliated with it, many under a new FHV Corporation (D & S Auto Leasing). In fact, 56 additional cars were now affiliated with Revel’s base from D & S Auto Leasing.
Remember, especially before the taxi 🚕 medallion folks get mad 😠, these are EXISTING FHV Licenses, NOT new TLC plates. What changed was the base affiliation and cars (became Teslas). Revel, it appears, essentially acquired (or reached another agreement) with an existing company that had claims to FHV licenses to grow its business. It’s important to once again reiterate an individual with claim to an FHV license (TLC plate) 🛑 CANNOT 🛑 sell their TLC plate. They are able to lease it though, but note there is an insurance liability risk, as an owner’s name stays on the insurance 👇.
Being in this industry for a minute and having done a fair amount of data analysis over the years, D & S Auto Leasing sounded familiar. Looking back at historical records, I confirmed that this FHV Corporation was previously affiliated (likely owned) by Commonwealth Worldwide (Executive Transportation), a well known, 40 year old luxury limo company with a presence in Boston and NYC (Commonwealth’s TLC plates often begin with COMM).
Why Did Commonwealth Sell? How Much Did Revel Pay?
These two questions are probably what many in the TLC industry would like answered, but probably only a handful of people actually know the specifics to (we can only speculate).
Why Did Commonwealth Sell (Or Lease) Its FHV Corp?
My best guess is (1) competing with UberBlack and other newer competitors, like Blacklane, is getting more difficult and (2) keeping $1 million+ ‘Luxury Limo’ liability insurance is getting prohibitively expensive. Increasing ‘Luxury Limo’ liability insurance costs was also called out in the recently published Black Car & Livery Task Force Report.
Perhaps Commonwealth decided to switch to an asset-light model where they wouldn’t own their fleet (i.e., don’t have to directly pay insurance premiums), but contract out their client work to independent operators or other bases. Another reason to reach this conclusion is Commonwealth’s ‘Luxury Limo’ TLC base (B02095) is still dispatching trips (as of April 2022) and appears to have at least one other FHV Corporation it owns.
How Much Did Revel Pay?
In terms of price paid 💵 (assuming another agreement wasn’t reached), based on a recent article in the Black Car News by former TLC Chair Matthew Daus on taxi medallion values and other industry dynamics, my best guess is a Commonwealth’s FHV Corporation (i.e., corporation claim to 56 FHV Licenses) sold for close to $1 million (assuming the sale was done a few months ago). The investment return math Revel likely did in coming up with a valuation will relate to how long it will take the company to breakeven on its investment, plus the benefit of helping the company grow and utilize its EV infrastructure.
Between healthy FHV Corporation transactions and a recovering yellow cab medallion market (we recently discussed our view on 🚕🚖 why yellow taxi medallion values will probably exceed $200,000 in the near future), we might FINALLY 🤞 be at a point where long-term investment capital can come back into the TLC industry and investors, including drivers, 📈 are willing to invest 🧐 in the market again.
AutoMarketplace.com NYC covers the for-hire transportation industry and automotive news. Check out AutoMarketplace.com on YouTube ▶️