Ride-Hailing Services Could Accelerate Acceptance of EVs

Electric vehicles (EVs) market gained a staunch supporter with the election of President Joe Biden, but motivating millions of drivers to go gas-free is still a daunting task. According to some experts, the U.S. needs to add 50 million EVs by 2030 to help meet its Paris climate commitment. Because the window for action is so tight, resources to stimulate the transition must be carefully planned and targeted. Ride-hailing businesses, also known as transportation network companies, may provide one such opportunity.

The importance of the transportation company network

The use of ride-hailing is growing, but transportation network companies (TNCs) still account for a relatively small share of miles driven in the U.S. In terms of prioritizing resources, that would seem to indicate that TNC electrification is not a particularly effective area in which to focus attention and resources.

However, the think tank RMI (previously known as the Rocky Mountain Institute) suggests that TNCs do have the potential to make a significant impact on EV adoption. The organization recently took a deep dive into the topic, based on TNC data provided by GM – and calls for an electrification campaign focused on the likes of Uber and Lyft.

The report outlines three reasons why TNCs should be an area of focus. First, individual TNC drivers could be more persuadable from a simple bottom-line perspective. The up-front cost of buying an electric vehicle is still higher than a comparable gas-powered car, but lifetime maintenance and fuel costs are lower. TNC drivers spend more time behind the wheel, so they are in a better position to appreciate the lifetime cost-of-ownership benefits of electric vehicles.

According to RMI’s analysis, a full time TNC driver in the U.S. travels about three times more miles than the average driver, meaning that electrifying one TNC car would have the same carbon impact as electrifying multiple privately used vehicles.

Another benefit involves the potential to increase access to public high-speed EV charging stations. As more TNC drivers go electric, that creates more demand for charging stations. TNC drivers could serve as “anchor tenants” that make it worthwhile for EV charging firms and public planners to build more charging stations in more diverse areas of a city or town. The benefits would ripple out to other drivers including delivery van fleets and other commercial vehicles.

Finally, TNC drivers can serve as EV ambassadors to large numbers of people. Compared to other drivers, TNC drivers encounter many more people in the course of their day. With each ride, they provide an opportunity for the public to become familiar with the EV experience.

“By converting conventional gasoline ride-hailing vehicles to electric, we simultaneously eliminate dangerous tailpipe emissions and leverage the rapidly decarbonizing power sector to reduce overall vehicle carbon emissions,” RMI observes. “In addition to the direct benefits, paving the path for ride-hailing electrification will do the same for electrification in other transportation segments.”

EVs: opportunities and obstacles

The opportunity to electrify TNC drivers is technologically do-able in terms of the vehicle itself, but financial obstacles remain.

RMI suggests that more TNC drivers would make the switch if there were more pathways to lowering the up-front cost of EVs. In addition to subsidies, the options would include an increased emphasis on leasing or renting, and marketing used EVs.

That problem may become moot in several years. GM and other auto makers anticipate that the up-front cost of EVs will attain parity with gas-powered cars by the middle of the decade, largely due to improvements in battery technology.

Partnering for rapid progress

That leaves the issue of charging infrastructure, a key consideration in urban areas where individual drivers don’t have the opportunity to install home charging stations.

RMI advises ramping up coordination between EV stakeholders, and that is an area in which GM may come into play.

GM has already begun to invest in the public fast-charging infrastructure, in anticipation of widespread EV adoption within the next several years and 100 percent electric mobility over the long run. Last summer GM teamed with the firm EVgo to introduce 2,700 new charging stations around the country, all to be powered with renewable energy.

The company is also focusing on the e-commerce and delivery van market through its new BrightDrop venture. BrightDrop launched last month following a successful pilot run with FedEx, which has committed to buying 500 of the firm’s new EV600 electric vans. Last week the national fleet management company Merchants Fleet upped the ante with a 12,600-van commitment.

The Merchants Fleet connection brings GM into contact with a fast-growing, innovative firm that influences fleet managers at a national scale, raising the potential for a significant impact on the demand for public fast-charging stations.

Gig workers and climate action

The new RMI report was supported in part by the green philanthropy ClimateWorks Foundation, which is positioned to focus stakeholders and investors on electrifying TNC drivers.

Still, hanging over the area of TNC electrification is the broader issue of the gig economy, its impact on worker rights, and its ripple effect on other job opportunities.

The COVID-19 pandemic has exacerbated the festering gig worker issue, and gig worker rights took a giant step backwards last year with the passage of Proposition 22 in California.

If TNC drivers are to play an important role in EV adoption, it is possible that auto makers like GM could help build a path forward that eases the risk of exploitation from the gig worker field.

GM may be in a position to help motivate change through its relationship with Merchants Fleet, which has taken up a leadership position on workforce education and training.

The automaker could also apply its long experience with labor unions to help improve conditions for TNC drivers, but that remains to be seen.

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