Ride-hailing fees can drive electric car use, says new report

26th September 2019 Christopher Carey

A new report released by the International Council on Clean Transportation (ICCT) claims that taxes and fees could be the solution to nudging ride-hailing companies and their drivers towards electric vehicles.

While dozens of US and European cities already operate some form of taxation on ride-hailing firms such as Uber and Lyft, the need for a more strategic approach to boost fully electric car use is urged in the report.

Key findings included:

  • Only 1 percent of vehicles used globally for ride-hailing are fully electric.
  • Fees could be used to support home charging installation for ride-hailing drivers and fund the deployment of fast charging in optimal urban locations–5 to 8 percent of fees collected from ride-hailing would be sufficient to create a self-sustaining charging infrastructure programme.
  • If charges were indexed to vehicle exhaust emissions, an average per-trip fee of between US$0.58 to US$1.12 would be enough for electric vehicles to be economically superior to hybrid vehicles (based on US operating costs).
  • By applying higher fees for polluting combustion vehicles, the total operating costs of electric vehicles could achieve parity with conventional vehicles within ride-hailing apps in 2020.

Sandra Wappelhorst, researcher at the ICCT and one of the report’s authors told Cities Today: “There is a big variation in the type of fee structures used in cities across Europe and the US–but some are certainly higher than other. New York for example generally has very high fees for ride-hailing firms.”

In New York city, an 8.875 percent sales tax per trip and a US$2.75 surcharge for trips south of 96th St. Manhattan, (US$0.75 for pooled trips) applies to journeys, along with a US$550 licencing application charge every two years.

The report suggests exemptions for drivers using electric vehicles in all these categories could be crucial in increasing electric car usage.

Some ride-hailing companies have already adopted a greener approach as part of their business model.

French ride-hailing firm Kapten, which launched in London in May, pays the central London congestion charge (£10.50 per day) for drivers who use electric or hybrid cars to incentivise them to switch to greener models.

The company, backed by Daimler and BMW has taken a conciliatory approach with city authorities, even backing London’s car-free day last Sunday.

Kapten is also working on a new feature where customers can specifically order a green car, which is due to be launched by the end of the year.

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