Uber Green Launches in NYC. Should NYC TLC Drivers & Fleets Buy EVs?
New option allows passengers to request an electric or hybrid vehicle for an extra charge. Uber is aiming to switch all US drivers to EVs by 2030
Uber has expanded its program, which hopes to incentivize drivers and passengers to use EVs or hybrids, to NYC. Uber Green allows passengers to request a hybrid or electric vehicle for a premium price (refer to screenshot above). Uber Pass members also receive a 10% discount on all Green rides plus 3x the reward points. It should also be noted drivers will receive an extra $0.50 from a $1 ride surcharge for every Green trip completed. The expansion of Uber Green is part of the company’s $800 million investment to transition thousands of drivers to electric vehicles by 2025, with plans for all U.S. rideshare drivers to have EVs by 2030.
“The launch of Uber Green and our commitment to electrifying vehicles on our platform are important parts of our larger efforts, and we will continue to take bold steps to confront climate change head on” - Harry Hartfield, public affairs manager for Uber in New York
So is now the time for NYC TLC drivers and fleets to make the switch to electric vehicles? (Note: I realize hybrids can also be used on the Uber Green platform, but my focus will be on EVs given Uber’s stated goal to transition all drivers to fully electric vehicles) Below, I share some thoughts about using EVs for the NYC TLC industry and why adoption rates may be muted in the near future.
Let me start by saying that I think EVs will dominate new car sales (not used car sales) by 2030. Electric vehicles are undoubtedly the future. However, driving an EV today is a tricky proposition for for-hire drivers and fleets in NYC for several reasons. To be clear, I’m not arguing against EV adoption, but rather highlight some of the key issues that are preventing more widespread use of electric vehicles among the NYC TLC driver and fleet community (i.e. only 0.3% of all TLC vehicles are EVs currently). I know many companies, drivers, and entrepreneurs (I hope to be among them) will help solve the challenges below. This is merely a snapshot of today’s reality and specific to NYC’s for-hire transportation market (i.e. the same may not hold true for another city).
Charging Time & Infrastructure
Many NYC drivers will point to a lack of charging infrastructure as a major deterrent to buying an EV. Unlike other rideshare markets, NYC drivers often do not park in a covered home garage where a charger can be installed. In addition, paying for an indoor parking space with a charger is also too expensive (i.e. costs at least $400 per month) and inconvenient (i.e. not close to home) for most drivers.
Given NYC’s unique parking dynamic, “quick-charge” infrastructure is what many drivers and fleets would look for ahead of purchasing an EV. For example, a TLC driver will want to be able to recharge their vehicle’s range (i.e. at least 60% to 80% of a full charge) in less than 20 or 30 minutes. Currently, there are three main types of chargers: Level 1, Level 2, and Level 3, often known as a DC Fast Charger.
Based on the diagram above, what most drivers will be looking for are DC Fast Chargers. New York State provides a helpful and dynamic EV charger map (link to map) which we can reference. As you can see below, there are currently less than 25 public DC Fast Charging stations in NYC! (Note: A charging station can have multiple individual chargers) More will come with time, but to service the 95,000+ TLC vehicle fleet the current charging infrastructure is far from where it needs to be.
When many think about the range of an electric vehicle, they often don’t convert it into a MPG equivalent (i.e. very few people say a full tank of gas has 400 miles of range). For example, if a Tesla Model 3 has 350 miles of range on a full charge, many assume that means the car will drive around 350 actual miles before it needs to be recharged. However, that range is an estimate for trafficless driving in ideal weather conditions. In reality, 350 miles of range may convert into 100 NYC miles, given traffic dynamics and weather conditions (i.e. heater or A/C is turned on). You can see this mentioned by Rami, a TLC driver who is currently driving one of the first Tesla yellow cabs in NYC (Rami speaks about the true EV range starting at 3:35).
While only a few cars, notably the Toyota Camry, dominate the NYC rideshare industry, TLC drivers and fleets still like to have options. Currently, there are only a handful of EVs that can practically be used for the TLC industry (i.e. Tesla Model 3/Y, Chevy Bolt, Nissan Leaf, Kia Niro). In addition, many of these vehicles cannot be acquired used and cost more than $40,000 (including sales tax), a high entry price point for many drivers.
Lack of 3rd Party Service & Parts Infrastructure
The lack of an independent service and parts ecosystem for EVs, specifically Tesla, is something many don’t think about but understand when explained. What do I mean by this?
Tesla, taking a page out of Apple’s playbook, doesn’t allow third parties to service its products. This is highly unusual for the auto industry and will be discomforting for many drivers and fleets. Some reasons why this is the case.
Drivers and fleets, in general, do not like relying on dealerships, which often charge high labor rates (i.e. $160+ per hour) and are sales-centric organizations (i.e. more concentrated on selling cars). In addition, larger fleets often own their own service and repair infrastructure
Dealerships usually have slow turnaround times, which can cost drivers and fleets thousands of dollars in lost income
Drivers and fleet often source parts from independent stores and vendors at cheaper prices than dealers sell them for
For example, Tesla has one main service center in NYC located in Red Hook (Brooklyn). While the overall rating for the center is high, if you sort by what’s dragging the rating lower, it appears service issues are causing a lot of problems for customers. My primary point is not that Tesla dealerships are worse than other OEM dealers, but that if you own a Tesla you don’t have any service and repair alternative (i.e. if you don’t like the Toyota dealer there are many other mechanics or service providers you can go to, including DIY). Since a scaled Tesla fleet has only been around for a few years it’ll be important to track the service experience of Tesla customers, especially those who use it for TLC work. Finally, it’s also important to consider whether Tesla voids warranties, specifically the critical battery warranty, if their vehicle is used commercially (i.e. rideshare). Replacing or repairing a degraded or malfunctioning battery can be prohibitively expensive.
All the above being said, Tesla (or other EV companies employing a similar strategy) could open more service centers and/or change its third party policies. So this commentary only reflects the reality of today.
Technological obsolescence is when a technical product or service is no longer needed or wanted even though it could still be in working order. There are multiple real-life examples that all of us have witnessed in our lifetimes (i.e. VHS < DVD < streaming OR original iPhone < iPhone 5 < iPhone 12). There is no reason, why this sort of tech progression won’t happen in the EV industry.
Today, a Tesla Model 3 may get 350 miles of range and take 20 minutes to charge (DC), but in 4 years time the 2025 Model 3 may be able to get 600 miles of range and charge in 5 minutes (solid state battery). While, over-the-air updates can help improve older tech, it is likely reasonable to assume there are certain hardware upgrades that would effectively make older models technologically obsolete with time. The reason this is a very different and an important consideration as it relates to EVs, is the initial cost of the technology product that becomes obsolete. Most people really didn’t feel the impact of their DVD player or iPhone becoming obsolete because the financial impact was relatively minimal. A $45,000 vehicle becoming obsolete in 4 years will have a significant financial impact for most, including drivers and fleets.
While the above analysis sounds like I am anti-EV, the opposite is actually true. I believe EVs should and will come to dominate the NYC rideshare industry over time. However, there are certain commercial considerations that NYC TLC drivers and fleets have to uniquely weigh before deciding to make the switch to EVs. Today, I think it’s too early for most NYC TLC drivers and fleets to make the switch, but that opinion could change as new cars, technology and infrastructure become available. I look forward to writing more about EVs and I hope you enjoyed the article. Let me know your thoughts as well.
The TLCMKT Newsletter is written by Dawood Mian, Founder & CEO of TLC Market. He covers the NYC ridesharing industry and related news. Search TLC Market for cars, parts, tires, mechanics, reviews & more. Find great deals at TLCMKT.COM.