California clean-air authorities want almost all Uber and Lyft rides to be in electric cars, imposing costly regulations that companies say are unworkable in the absence of additional public incentives for electric vehicles.
The draught regulations, which are set to be approved on May 20, mandate that EVs account for 90 percent of ride-hailing car miles traveled by 2030. The California Air Resources Board’s draught regulations (CARB). This is less than what companies have agreed to: Uber and Lyft have recently committed to converting their US fleets to EVs by that year.
CARB electric-vehicle graphic goals: https://tmsnrt.rs/3u5EVaq (Graph: Uber and Lyft’s electrifying targets for California, https://graphics.reuters.com/UBER-ELECTRIC/CALIFORNIA/jznvnarexpl/chart.png)
However, companies oppose the CARB’s attempt to force a transition, claiming that taxpayers will bear a significant portion of the expense.
Even with government subsidies and expected price cuts, the total cost of the 2030 state standard could exceed $1.73 billion, according to the Union of Concerned Scientists, a non-profit research and advocacy organization that calculated the overall transition cost at the request of Reuters.
California and the horse-drawn duopoly are clashing less than a year after companies won a legal battle against the state to keep their drivers autonomous rather than self-employed. Companies’ business models are among the most significant barriers to converting their fleets to EVs. Their drivers own their vehicles and may operate them as little or as much as they want. As a result, full-time jobs are insufficient to justify higher upfront EV costs.
“You’ll have to pay off my car… and then give me the benefits to make a new payment worthwhile for me,” Daniel Russell, a former Uber and Lyft driver in Los Angeles prior to the pandemic, said.
According to Russell, the majority of drivers buy used vehicles, and many have poor credit, making it difficult to obtain costly car loans.
Uber and Lyft also said that they could not afford to make the switch to EVs. Uber stated in a December letter to CARB that the rule would impose unnecessary costs on businesses, drivers, and consumers unless “reasonable” subsidies were provided.
“No single government or organization can absorb all of the costs of a rapid transition,” Uber told Reuters in a statement. According to Lyft, taxpayers are forced to fund the move because existing government benefits only make EVs accessible to “normally high-income white homers,” while the majority of California Lyft drivers are low-income minorities.
Neither company has made a profit after ten years of operation, but both generate billions of dollars in sales and are publicly traded. Uber is worth approximately $86 billion, while Lyft is worth approximately $16 billion.
CARB’s sustainable transportation manager, Joshua Cunningham, stated that the organization supports higher pay for lower-income drivers, regardless of whether Uber and Lyft will meet the transformation that CARB needs. He described the electrification goals as ambitious but attainable.
CARB emission targets in graph form: https://tmsnrt.rs/2QDFNV6 (Graph: Uber and Lyft must reduce CO2 emissions, https://graphics.reuters.com/UBER-ELECTRIC/CALIFORNIA/qzjvqzbkx/chart.png)
California State Senator Nancy Skinner, who voted in favor of CARB’s 2018 legislation, stated that businesses could bear the majority of fleet conversion costs because their operations have raised carbon emissions.
“These cars are travelling more miles and for them,” she said.
ACTUAL LENGTH OF EXTREME ROAD
The debate would put ride-hailing companies’ long-standing commitment to reducing carbon emissions to the test. Uber and Lyft have stated that their services would help to mitigate climate change by reducing traffic and providing an alternative to private car ownership. However, several studies have found that private car ownership has risen slightly in recent years, and that hailing fleets have exacerbated urban traffic congestion. According to a survey conducted by Uber and Lyft, their effect on traffic is negligible.
Uber and Lyft pointed to existing agreements with leasing and charge station suppliers to reduce drivers’ energy costs and suggested that they are seeking similar deals with car manufacturers. Last week, Uber announced a collaboration with Arrival, a British electric van, and bus manufacturer, to develop a car for European drivers to use on ride-hailing platforms.
Uber also revealed an $800 million global investment to assist drivers in transitioning to EVs by 2025. However, this is a drop in the bucket of funds needed by February 2020 to convert the approximately five million drivers on its network.
California is currently providing some of the most generous incentives in the country for new combustion motor vehicles, with the goal of eliminating sales by 2035. However, according to the California Energy Commission, battery-electric vehicles accounted for just 1.3 percent of the state’s light-duty car fleet in 2020, and 6.2 percent of all new 2020 sales. Ride-hailing trips actually account for approximately 1.2 percent of all passenger vehicle miles driven in California. According to CARB, ride-hailing companies emit more pollution per passenger mile travelled because they spend more than a third of their time cruising without passengers and only hold a small number of riders on occasion. According to the researchers, electrifying one-hat vehicle saves the same amount of CO2 as converting three regular gas-powered passenger vehicles to electric vehicles.
However, some Uber and Lyft vehicles emit far more emissions than others. CARB reported that if companies concentrate on full-time drivers who travel more miles, they will achieve the 2030 electric vehicle-miles targets by upgrading less than half of their fleets.
For a mile, it’s just 4 cents.
Given California’s high initial cost of converting fleets to electric vehicles, transportation will only cost Uber and Lyft another four cents per millet driven by their drivers, according to Elizabeth Irvin, a senior transport analyst for the Union of Concerned Scientists. During the same time span, drivers will save $1.1 billion in maintenance and fuel savings, according to the association.
CARB’s new legislation would enable businesses to reach carbon reduction targets other than EVs. These efforts, however, are fraught with difficulties.
The regulations would credit companies for constructing bike paths and connecting drivers to public transportation by allowing them to purchase tickets via their apps. Such efforts, however, would be hampered by California’s disjointed transportation networks. Regulators also suggest that companies minimize pollution by reducing the number of miles flown without passengers, but this will jeopardize their attempts to reduce costs and wait times. Companies can also facilitate multiple passenger carpooling journeys, but this has proven to be ineffective in the past.
These policies are unlikely to help CARB achieve its carbon reduction targets, according to Lyft, which urged the organization to instead concentrate on incentives for electric vehicles in a statement. Such subsidy programs, regardless of who pays for them, are difficult to create for independent contractors.
For example, if Uber and Lyft assisted their drivers in purchasing EVs, their freelance drivers will no longer be able to work for them under their current business models. And drivers have few options to avoid the additional cost of business electrification requirements.
The majority of EVs are now purchased and installed in the homes of higher-income individuals, who also buy and install chargers. Uber and Lyft drivers are the polar opposite: low-income tenants who do not have access to home loaders, forcing them to rely on expensive public loaders. According to Irvin of the Union of Concerned Scientists, the burden of the EV transition cannot and should not be borne by lower-income drivers.
“It is important for businesses to pay upfront costs, not drivers,” said Irvin. “This regulatory framework only keeps businesses responsible for past obligations.”
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