⚡$42K Fender Bender, Taxi Medallions, TLC Plates & Why Fleets Should Drive EV Adoption (Part 2)
Large TLC rental companies with thousands of TLC Plates and yellow cab garages, NOT individual TLC drivers or small businesses, should drive NYC TLC zero emission fleet goals
In yesterday’s piece, ♿+⚡ NYC & TLC Want 25% of Uber/Lyft Trips to be in EV or WAV Within 3 Years (Part 1), we shared the facts and technicalities of the City and TLC’s proposed zero emission (ZEV) and wheelchair accessible vehicle (WAV) mandate.
Today, we wanted to share some thoughts and opinions about the plan to rapidly electrify the NYC for-hire (TLC-plated) vehicle fleet over the course of the next several years.
EV Is The Future (& Big Business Opportunity)
Firstly, we believe and understand the need to adopt zero (or low 😬) emission vehicles (ZEVs) and new technology in general. While some NYC for-hire drivers or fleets might purchase hydrogen fuel-cell (or other ZEV technology) vehicles, at this point it appears most will likely be purchasing battery electric vehicles (BEVs, more commonly referred to as EVs).
It’s a matter of when, not if.
AutoMarketplace views the adoption of electric vehicles in the NYC for-hire transportation as a generational business opportunity for our company and many entrepreneurs. In fact, our (we started out as TLCMKT) very first video on YouTube, nearly three years ago, was a detailed interview with a TLC driver/business owner about his electric Chevy Bolt. EVs have been on our minds for quite some time.
🚀🗽 Moonshot Optimism & NYC Leadership
One aspect of NYC & TLC’s announcement that we really like is that it positions New York City 🗽 as a “first mover”—a standard-setting global city in the ground transportation industry—both by reducing emissions and adopting new technology.
For example, when California recently issued 24/7 operating licenses for driverless robotaxis in San Francisco, we felt that NYC was, once again, being surpassed by technology-centric Silicon Valley—a region that continues to serve as a common birthplace for modern business innovation. After all, the companies that now dominate NYC’s for-hire transportation sector, Uber and Lyft, were both born and remain headquartered in Silicon Valley, NOT New York.
Setting a moonshot 🚀🌙 goal is sometimes necessary; otherwise, progress will be slow, and perhaps it won't happen at all. People often cling to a comfortable status quo, while new technology and noble environmental goals advance in more forward-thinking cities or regions. Those locales then attract more talent, capital, taxes, etc., which solidifies their leadership position. Supporting moonshot companies and ideas has been, and hopefully continues to be, a part of New York City’s playbook.
Technology & Policy: Real Impacts on People
Moonshot optimism, as with so many things, has to be balanced with real life considerations and risks. To extend the “moonshot” concept, if the rocket doesn’t make it, what are the consequences?
Specifically, if NYC or TLC promotes and adopts bad policy, how could it impact the 100,000s (not an exaggeration) of NYC drivers, their families, small businesses and communities that make a living in or from the City’s for-hire transport sector. One does not need to look too far back in the history books to observe how policy failures can hurt working class New Yorkers, leading some to financial ruin and other hardships.
Policymaking
We also operate under the assumption, perhaps naively, that hearings are not mere formalities. That real debate can happen, that people can disagree. Have different viewpoints based on work and life experience. That “ordinary” New Yorkers, from a TLC driver to a small businessperson, has the ability to be heard and for it to impact policy.
We hope the NYC TLC hearing on Wednesday, September 20th at 10am is an actual hearing, where feedback is incorporated into policy and not part of a bureaucratic “to do” list. We hope this hearing is not a formality. We also are against intimidation or other tactics, including lobbying, that attempt to bully policymakers and prevent them from doing their jobs — enacting the best policy for New Yorkers.
🤑 When You’re Not Paying…
Let’s begin our discussion about the proposed zero emission policy with money 💰.
Who is paying for the zero emission vehicles and how does it impact them? The simple answer is individual TLC drivers and fleets. It’s easy for Uber, Lyft, Revel, the City, TLC to do janky math and say they are all-in on zero emissions when it’s (1) not hitting their pocketbook or (2) when losses are being subsidized by investors or taxpayers.
Uber and Lyft DO NOT own their vehicle fleet, Revel’s rideshare business is likely unprofitable to the tune of millions of dollars of monthly cash burn, the City and TLC are political entities funded by taxes. Are any of these things illegal? NO. However, it’s easy to make promises and proclamations, when you’re not really paying for anything or being subsidized by investor or taxpayer money. Individual drivers who are living paycheck to paycheck and small mom & pop operators, do not have such luxuries.
HOWEVER, it’s equally important to be constructive, clearly describe the issues (as you see them), present solutions and not merely rant.
Given our fleet and small business owner DNA, we wanted to use one simple example to help policymakers and TLC industry participants, understand the dangers of aggressively forcing individuals or small businesses to adopt EVs.
In TLC’s Green Rides announcement, the following is written.
“With the upfront cost of purchasing an EV no longer present as a financial barrier, along with lower maintenance and charging costs associated with EVs, EVs will become more financially viable than ICE vehicles”
- NYC Taxi & Limousine Commission
While we agree with the main point of the sentence (i.e., EVs are becoming more affordable), we also pushback on some assumptions based on personal experience overseeing a lot of maintenance & repair spending, specifically for NYC TLC-plated vehicles. The assumption that an EV is cheaper to maintain than an internal combustion engine (ICE) vehicle, is a non-NYC operator, academic view of the true cost of owning a City for-hire vehicle.
An article published by The Drive earlier this year caught our attention and is hopefully a good, simple illustration of why this assumption should be questioned.
$42,000 EV Fender Bender
Journalist Nico DeMattia documents one Rivian owner’s nightmarish experience fixing what appeared to be a relatively simple fender bender. While it’s hard to get the exact figures, this sort of accident probably happens hundreds, if not thousands, of times per month in NYC’s for-hire transportation sector.
What Happened?
Long story sort, a Rivian was rear-ended, a pretty standard fender bender accident that occurs to NYC TLC-plated vehicles on a daily basis. Since the Rivian was rear-ended, the other driver’s insurance company sent the Rivian owner a $1,600 check as compensation based on its estimate of the damage.
However, when the Rivian owner went to a manufacturer certified shop, the total cost ended up being $42,000!!! 👀
The $42,000 repair cost, along with [the driver’s] rental car cost, was very close to maxing out the other driver's $50,000 insurance payout limit.
- The Drive
Video overview from The Electric Viking
Although this story ended well with an insurance company covering the cost, as it was uncontroversial no-fault insurance determination, we believe this will eventually lead to:
Insurance companies charging higher premiums to cover EVs
Insurance companies choosing NOT to insure EVs at all
Drivers being subject to large out of pocket maintenance & repair bills for previously affordable, comparable auto repairs
“The reason why EVs are more expensive to repair is one they have more expensive components, especially the batteries, and two, they’re more likely than regular internal combustion engine vehicles or ICE vehicles to need a full replacement once they’re in a collision. The replacement values for EVs are generally higher than for ICE vehicles because their retail values are higher.”
- Jasper Cooper, vice president senior credit officer at Moody’s
“While your dealership probably won’t be upfront about the cost to insure an EV, they’re about 28% more expensive to insure compared to a gas car…It would be good to talk to your insurer about how much your premiums may increase if you switch to an EV.”
- Divya Sangameswhar, ValuePenguin
“Citing CCC Intelligent Solutions’ finding in 2022 that the average small non-luxury EV model costs $4,041 to fix — about 27% more than the average for roughly comparable non-EV models — and concluded that EVs have lower maintenance costs but cost more if they’re damaged in a car crash or by bad weather. Among mid-size luxury SUVs, the difference was even more pronounced: $8,037 versus $5,242 for internal combustion engine (ICE) vehicles, according to CCC.”
- Repairer Driven News
For example, we recently wrote about a TLC-licensed driver who couldn’t find an insurance company offering comprehensive & collision coverage for his $100,000+ Tesla (yes, you read that right!), which also happens to be one of the few EVs that qualify for UberBlack (another topic we’ll discuss in a follow-up piece).
To be clear, this means that if this driver gets into an at-fault accident, partial-fault accident, accident with an uninsured motorist, has his vehicle stolen, hit by a tree, flooded or gets hit while parked – or any other situation that results in physical damage to his Model X – he’s likely to face a substantial out-of-pocket repair bill. A bill he’s unlikely to be able to afford.
Individual TLC Driver & Small Business
From misinformed assumptions around the potential total cost of EV ownership, as the Rivian example above shows, or the earnings time lost while waiting to charge a vehicle, there are many real issues that barely get discussed. Instead, many focus only or mostly on the lack of charging infrastructure. This is definitely an important matter, but not the only one.
Working Class Facts
The working class majority and local businesses know the true cost of operating a for-hire NYC vehicle. They live and breath it, they pay its operating bills every day, week, month and year. The news headlines people talk about related to rising interest rates, auto repair and insurance inflation, are all felt in a very real way by drivers and all TLC businesses. For example, while the price of an EV can decline, if the cost of financing an EV doubles or is not accessible, that impacts adoption.
We’ve dealt with many insurance claims and various situations on the street, from cars flooding to major accidents. We know what can happen on NYC streets and we know how much it costs to operate, maintain and fix NYC for-hire vehicles - it’s not so simple, and it’s not as cheap as policymakers think when they read about it in thought pieces or academic papers by those who’ve never invested real money into a business, let alone run one.
If a NYC TLC driver is stuck with a $42,000, even $5,000, bill to deal with a fender bender, there will be a financial crisis in the industry. Drivers will be stuck in upside down auto loans, they’ll lose their TLC plates, they’ll be out of business, their lives and businesses turned upside-down.
Right now what’s obvious to anyone with decent knowledge of cars and the NYC TLC industry, is that an EV involved in a run-of-the-mill “taxi accident” might cost a small fortune to fix. This unfortunately has the potential to bankrupt a driver 🤔.
*New* EV-only TLC Plates
Creating perverse incentives to push individual TLC drivers into buying EVs can turn into a very costly endeavor for many financially unprepared drivers or small fleets. If individual drivers are incentivized with “free” TLC Plates, many will roll the proverbial EV dice.
For example, releasing *new* EV-only plates when there is a FHV License Pause AND thousands of inactive yellow cabs doesn’t really make sense, UNLESS you use that documented demand, which is really driven by the TLC Plate Cap that’s meant to protect driver earnings, as an underlying indicator for EV demand 🤔.
The recent call by a well known environmental advocate, who is also quoted in yesterday’s official City announcement, to re-issue unclaimed stored TLC Plates as EV-only TLC plates, makes it seem like this policy is decided and the opinion pieces are just for “the public record”, before the TLC announces the release of more EV-only FHV Licenses.
As mentioned previously, the (re)issuance of *new* EV-only TLC Plates, while thousands of taxi medallions remain inactive and the yellow cab sector oddly not subject to any City electrification mandate, does not make a whole lot of sense. If the TLC (re)issues any *new* FHV Licenses, without ensuring all taxi medallions are sustainably active, they will be making a mistake. It will continue to cast a dark cloud over the taxi medallion industry and any recovery in medallion values, including impacting the value of City-guaranteed medallion loans.
So, up until this point it might seem like we’re ranting and complaining without proposing any actual solutions that policymakers can consider.
👇👇👇👇👇
Large Leasing Companies, Taxi Garages & Revel
Instead of individuals and small businesses, we believe TLC-plated vehicles owned or managed by large FHV leasing companies, that have the ability to financially experiment with EVs, should be targeted by the TLC to drive electrification goals in the EXISTING TLC fleet (i.e., NOT issuing new TLC Plates).
We also believe these large leasing should be subject to FHV Lease Caps, similar to ones that exist in the taxi medallion industry. Just like the taxi medallion lease cap rules, there should be a lease cap for a Vehicle + FHV License & FHV License standalone, if a driver would prefer to purchase their own vehicle (similar to leasing a taxi medallion standalone that attaches to a “Driver Owned Vehicle" (DOV)).
The three largest FHV Corporations have claim to thousands of FHV Licenses (TLC Plates). These companies, let’s define it as FHV Corporations (i.e., on a ‘doing business as’ (d/b/a) level) that have claim to more than 500 TLC Plates, should be required to convert [TBD%] of their CURRENT fleet to EVs on a gradual timeline to 2030. Companies like Revel, who we appreciate has invested tens of millions in building out EV charging infrastructure, will undoubtedly be engaged (already are) by these larger fleets on a charging infrastructure and EV fleet management level.
This proposal may seem unfair, but the creation of the TLC Plate Cap has created tremendous equity value for these companies. We aren’t saying anything illegal is occurring, we are simply pointing out that these large leasing companies benefited to the tune of hundreds of millions related to the TLC Plate Cap being implemented. For example, Fast Track Mobility, a large FHV leasing company was acquired by another large TLC rental company Buggy, for tens of millions of dollars. Again, not a crime, but simply stating facts.
In addition, large yellow cab garages and taxi medallion owners, such as Marblegate, should also be required to convert [TBD%] of their fleet to EVs. Companies like Revel, a NYC-based startup, will also likely benefit from helping large yellow cab fleets transition.
Balancing Act
TO BE FAIR TO LARGE LEASING COMPANIES & TAXI GARAGES, as this is a lot of new rules and regulations to navigate, the TLC should promise a five year moratorium on the issuance of any FHV License attached to a business entity and a ten year moratorium on the issuance of any new taxi medallion.
TO BE FAIR TO INDIVIDUAL DRIVERS, we also believe any TLC Plate that is retired via natural attrition should automatically be auctioned exclusively to an existing individual driver waitlist that prioritizes driver experience in some manner (i.e., number of TLC trips, years with an active TLC Drivers License) . These “reissued” FHV Licenses should ONLY BE FOR INDIVIDUAL DRIVERS and be restricted to an EV OR low emission (😬) hybrid vehicle for the first four years, before reverting to an EV-only TLC Plate.
There is path to creating a more sustainable TLC Fleet, but it requires patience and an understanding of NYC’s “street reality”. Large fleets are likely the only player in the market that can afford to experiment with EVs right now.
As always, let us know your thoughts in the comments section below or by emailing us at info@automarketplace.com.
AutoMarketplace NYC covers the for-hire transportation industry and automotive news. Check out AutoMarketplace on YouTube ▶️
Excellent analyses !