The drive to electrify the nation’s rideshare and on-demand delivery companies took a step forward on Thursday when the California Air Resources Board (CARB) approved a vehicle electrification plan for transportation network companies (TNCs).
The board voted unanimously in favor of the mandate.
Under the Clean Miles Standard, 2% of all TNC trips must be in elective vehicles (EVs) in 2023 and that ramps up to 13% by 2025, 50% by 2027 and 90% by 2030. The rule requires TNCs to submit two-year plans by January 2022 and begin complying by January 2023.
While both Uber (NYSE: UBER) and Lyft (NASDAQ: LYFT) have set goals for electrifying their fleets entirely by 2030, in letters submitted to CARB prior to the vote, both companies called on the organization and state to do more to help drivers obtain EVs.
“Lyft supports CARB’s EV and GHG targets for TNCs and advocated for aggressive targets throughout the process,” Paul Augustine, senior manager of sustainability, told Modern Shipper in an emailed statement. “We look forward to continued partnership with CARB and a diverse group of stakeholders – TNCs, policymakers, environmental groups, auto manufacturers and charging network providers – as it will take the work of all of us to achieve this goal.”
In a letter to CARB prior to the vote, Augustine urged the organization to “ensure targets are and remain technically and economically feasible” and that the group “adapt existing incentives and/or develop new ones to support TNC electrification.”
In its letter submitted to CARB for presentation during the meeting, Uber argued that CARB’s assumption on driver adoption of EVs is unrealistic.
“Assuming the EMFAC model (provided by CARB) has correctly predicted the number of EVs available each year through 2030, there should be approximately 650,000 EVs available in 2030. Given the proposed targets, this means that TNC drivers will have to acquire 50%+ of the entire available fleet of EVs in the state of California by 2030 despite making up less than 1% of the total California population. Assuming that over 50% of the state’s EV supply will be adopted by less than 1% of the population is not realistic, even with massive subsidies,” the letter stated.
The company said the ability of TNCs to attract 50% of all EV owners in the state into the service is not achievable.
“This disproportionate ratio means that the lower and moderate income TNC driver population will be forced to compete with wealthier California residents for an overwhelming percentage of the EV inventory. This will likely result in two outcomes. First, the price of EVs in the primary market may increase given the increased demand competition. Second, TNC operators will be forced to look at a nascent EV secondary market where supply is generally less reliable, of lower performance (e.g., battery life and range, passenger and trunk capacity), less supported by subsidies and carries a higher TCO than used hybrids,” the letter said.
CARB’s draft report outlining the proposal cited the growing need to regulate transportation emissions amid the growth of rideshare services in the state. In 2014, vehicle miles traveled (VMT) by TNCs represented just 0.05% of total VMT, but that had grown to 1.2% by 2018, with Uber and Lyft accounting for the majority of those miles.
“The TNCs are well positioned to help state and local agencies meet air quality and climate goals through electrification. In fact, the two largest TNCs in California, Uber and Lyft, have already been at the forefront of experimenting with electrification through various pilot programs in the U.S. and globally,” the report said.
The final report noted that 1.25% of California’s light-duty VMT in 2018 was associated with TNCs. Of that 4.3 billion miles, CARB estimated that 38% were empty miles (with no rider or delivery). TNCs generated 1% of California’s greenhouse gas emissions (GHG). CARB estimates the rule will reduce particulate matter by 93.21 tons and NOx emissions by 298.03 tons. It estimates a net benefit of $215 million in 2030. It added that drivers could expect to save $1,670 a year driving 20,000 miles and $2,212 a year driving 30,000 miles. Both those figures include anticipated incentives. Greenhouse gas emissions would be reduced by 1.81 million metric tons of carbon dioxide, CARB predicted.
CARB is allowing optional GHG credits the companies can earn. These include credits for vehicle trips connected to a mass transit trip or trips purchased through an integrated fare system. Involvement in bike or sidewalk investments can also earn the companies credits, which must be used in the same year they are earned, CARB said.
The Union of Concerned Scientists estimated that meeting the 2030 standard will cost $1.73 billion. In a statement issued to CARB for the meeting, Elizabeth Irvin, representing the group, said it was pleased with the proposal.
“We are strongly supportive of efforts to reduce emissions from ride-hailing, as our research has found that the average ride-hailing trip currently produces 69% more greenhouse gas emissions than the trip it displaces. If implemented carefully, this proposed rule has the potential to provide significant benefits in greenhouse gas emission reductions, air quality improvements, increased availability of EV charging infrastructure and savings for ride-hailing drivers,” the group said.
Electric vehicles account for roughly 2% of new vehicle sales in the U.S. Ford (NYSE: F) and General Motors (NYSE: GM) are among the automakers moving to electric-vehicle lineups.
Earlier this month, Uber announced a deal to build an electric car with Arrival (NASDAQ: ARVL), the U.K.-based electric bus and van manufacturer. Uber has a similar deal with GM in the U.S. that was announced in September 2020. The new deal with Arrival is for a purpose-built electric vehicle for ride-hailing, with a test vehicle ready later this year and production beginning in Q3 2023.
CARB is exempting smaller TNCs from the regulation. Those are defined as companies with fleets that travel less than 5 million vehicle miles annually. Wheelchair-accessible vehicle trips are also exempt.