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A cleantech group’s research predicts that electric vehicles will be more economical than hybrids by 2025.
The business case for electrifying ride-hailing services such as Uber and Lyft is looking better and better.
Right now, hybrid vehicles are the most economical choice for drivers of ride-hailing services, but a recent report projects that long-range electric vehicles will surpass hybrids as the cheapest option by 2025.
The report from the International Council on Clean Transportation says the shift will be driven by cheaper batteries and advancements in charging infrastructure, including cheap overnight charging.
The trend is drawing interest from companies like Culver City, California-based Envoy Technologies that see a growing opportunity around electric vehicle ride-hailing.
Envoy is a community-based electric car sharing platform known for persuading people to get rid of personal vehicles and instead drive one of its electric cars.
The startup works with apartments, hotels, and businesses around California, and it allows neighbors, coworkers, hotel guests, and even college students to share onsite electric vehicle fleets.
The company is now piloting programs that allow customers to use its cars to drive with Uber, Lyft, and other ride-sharing companies. Co-founder Aric Ohana said roadblocks for electric vehicles are disappearing.
“In the past, the range of the vehicles wasn’t that far, that’s number one,” he said. “It was below a 150-mile range for the majority of vehicles. Number two, the infrastructure was not in place. Both those components are really changing this year.”
The International Council on Clean Transportation report predicts that the numbers will pencil for ride-sharing electric vehicles much sooner than previous estimates. “The future is bright for electrifying the ride-hailing companies even though today they clearly are not all that electrified,” said Nic Lutsey, program director and report co-author.
Government policy can play a significant role by encouraging the development of electric charging infrastructure. That could hugely impact the market, and the California legislators have already passed bills to do so.
California leaders last September passed a bill designed to encourage ride-hailing companies to adopt zero-emission cars. The law, SB 1014, directed state regulators to craft a policy to electrify so-called “transportation network companies” or “TNCs” to reduce their emissions.
It’s a big deal. In San Francisco alone, these services account for 570,000 vehicle miles traveled every weekday. A policy that steers the ride-hailing fleets from hybrids to electric vehicles could have huge ramifications, according to Lutsey.
“Obviously that would be dramatic in terms of how the TNCs would have to change their practices and think more proactively about where all their drivers are and whether they are charging,” he said.
This all could be good for a company like Envoy, which is invested in a range of communities. In partnership with Electrify America, Envoy won a $1.5 million grant from the California Energy Commission to place electric vehicles and charging infrastructure in low-income communities with high air pollution across the San Francisco Bay Area and in Sacramento.
“We’re interested in this mobility revolution being equitable,” Ohana said.
The market for electrified ride-hailing presents a huge opportunity, according to Richard Steinberg, senior director of Electrify America, a company established to encourage drivers to choose electric vehicles and build a nationwide charging network with a $2 billion slice of the money from Volkswagen’s diesel emissions settlement.
“Utilization is key to our profitability,” Steinberg said. “These stations are pretty expensive to install, and they have a limited number of charges per day. It’s tough to earn a profit. But the kind of driving patterns and fast charge needs that car-sharing fleets and taxi fleets need will drive our utilization to where we’re really looking at this is a key area for us to drive our profitability.”
While researchers found a compelling case for ride-sharing drivers to make the shift to plug-in electric vehicles, they acknowledge that the move isn’t likely to happen without policy support. And, similar to private car owners, it will need to be encouraged by a broad awareness and education campaign.
“Even with the positive economics, ride-hailing fleet electric uptake is largely in city-specific pilots,” researchers wrote. “Even when electric vehicles reach hybrid ownership cost, companies will need to deploy charging networks, with policy support, to meet the specific charging needs of growing ride-hailing fleets.”
Still, Ohana said that people are responding well to Envoy’s service.
“If you look at the market share for electric vehicles in 2017 it was only about 2 percent,” he said. “It doubled in 2018 to 4 percent. And if you look at the manufacturers that are coming out with additional model electric vehicles this year with longer ranges. That will push the component of making electric vehicles within ride-hailing very easy to adopt.”