New York is proposing a rule that would slow transport electrification

They should move cautiously

• Welcome to Decarbonizing Transportation by Andrew Salzberg. Every two weeks (or so) I go deep on one topic and present a roundup of the latest decarbonization news at the bottom of the email.

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Revel, best known as the company offering a well loved but sometimes controversial fleet of shared electric mopeds, recently announced a plan for an all electric car service in New York. You’d think that an entirely electric service driven by employee drivers (and not by more controversial independent contractors) would be welcomed with open arms by New York’s regulators. It was... not. In fact, the city’s Taxi and Limousine Commission (TLC) reacted so strongly it has now proposed ending any company’s ability to register new battery electric for-hire vehicles. That’s a change that could have much a bigger impact than anything Revel’s proposing.  

Just to get it out of the way: I have no financial stake in or relationship with Revel, and my only skin in the game is an interest in decarbonizing transportation. 

To get a sense of what’s happening, you have to understand the regulatory landscape for New York’s For Hire Vehicles (FHVs). FHVs are all the cars available ‘for hire’ (including Uber & Lyft) other than the city’s iconic yellow taxis. In 2018, the city enacted a moratorium on registering new FHVs. As vehicle licenses expire and aren’t renewed, the number of vehicles permitted has decreased, a decline accelerated by the pandemic. The city’s 2018 rule created two exemptions: wheelchair accessible vehicles and battery electric vehicles. As a result, more than 330 battery electric vehicles have been licensed since the moratorium, according to bi-annual reviews of the city’s policy. They still make up less than 0.5% of the total.

That’s the background for Revel’s proposed launch of a new all electric service, which the TLC has made clear they oppose. I was surprised by that position, so I reached out to the TLC to learn more, but they did not respond to a request for comment. I was left to piece together their argument from public statements. Although I always assume good intent on behalf of public agencies, it’s hard to support the TLC’s current position.

They’ve said (as in this article) that the EV exemption was created to allow currently licensed vehicles to go electric, but in their own proposal to end the exemption, they confusingly say the opposite: that existing vehicles don’t need it. That undercuts their assertion that Revel is ‘exploiting a loophole’ rather than doing what the law intended.

They’ve also said that Revel’s 50 new EVs will cause congestion, but more than 300 EVs were added before Revel arrived with no comment from the TLC. And thanks to attrition and the pandemic, the total number of FHVs licensed has dropped by 10,000 vehicles since the 2018 moratorium, seemingly dwarfing the impact of the small number of new EVs.

If they survive, the current rules are actually well positioned to accelerate a transition to an electric FHV industry. COVID caused many drivers to give up their vehicle licenses, permanently lowering the number of gasoline powered FHVs on the road. That reduction of licensed vehicles will hinder the growth of ridehail platforms as travel demand returns post COVID, as we’re already seeing. If those companies want to add new supply, they will have to turn to electric vehicles. If they want that to work, they will have to figure out charging infrastructure, a notoriously difficult challenge.

That’s one area that’s particularly appealing about Revel’s plans - they’ve made a serious upfront investment in vehicle charging. To make it happen, they are launching a dedicated charging site in Brooklyn with 25 fast chargers (rendering below), which Revel CEO Frank Reig said will be “the largest public access (e.g. non-Tesla) fast charging site in the Americas”. Reig also makes a very explicit link between their ability to invest in this charging infrastructure and their FHV service launch. “In a city like New York, you don't want to put a charger in the ground and hope and pray somebody shows up to use it. Unless utilization is 25% or more, you’re essentially putting infrastructure in the ground to burn money. Our rideshare fleet is that charging demand from day one.” Revel’s charging infrastructure will be open to the public, in addition to its own fleet. This model - if it works - would explicitly use electrified ridehail to jumpstart charging networks for everyone else. 

As an added benefit, some charging infrastructure built for FHV drivers would be located near their homes, primarily in minority and low income neighborhoods. That could help address the critique that EVs end up merely as play things for the rich.  More generally, New York City has identified the need for more fast charging infrastructure as part of its climate plan. 

And while the immediate debate is framed as the TLC moving to shut down Revel’s 50 electric vehicles, changing the policy would have impacts well beyond Revel’s relatively modest proposed operations. There are more than 100,000 licensed FHVs. If Uber and Lyft start to get serious about upgrading their fleets to electric, their need for charging infrastructure and associated investment would dwarf what Revel is currently contemplating. TLC’s rule change would slow that transition by eliminating the incentive for incumbent players to adopt electric vehicles.

In fact, pushing Uber and Lyft might just be Reig’s goal. He isn’t shy about comparing Revel’s approach to its larger competitors. Both of the ridehail giants have announced plans to have fully electric fleets by 2030, not quick enough for Revel. “We're electrifying rideshare right now: literally this month, in 2021. 2030 is irrelevant. Companies talking about 2030 is like when politicians talk about hopes and prayers.” As far as I’m concerned, private companies competing on how fast they can electrify their services is the kind of competition we want to see.

The TLC argues that EVs are now cheaper and more readily available than in 2018, and there’s no longer any reason to incentivize their adoption. I’m hopeful that that will eventually be true, but we’re not there yet. Revel’s investment is one hopeful (but so far, rare) sign of a post-COVID FHV industry that might “build back better.” If EV registrations start to takeoff, the TLC will have a stronger argument to slow their growth. But scheduling a hearing to end the EV exemption on the day of the democratic primary for mayor feels too hasty for a change of this magnitude. At the very least, they could propose this change during the regular bi-annual review process of the license moratorium to give all parties more time to consider the implications.

It’s reasonable to be skeptical of the chances of success of any individual business model. I can’t predict if Reig and his team at Revel will ultimately build a successful business, and many zero emission vehicle startups have come crashing back to earth this year. But Revel is willing to put real money in the ground to build charging infrastructure, pay drivers a reasonable wage, procure dedicated electric vehicles, and try to put a little competitive pressure on Uber and Lyft’s long term plans for zero emission fleets. What’s not to like?

Whatever your take, the hearing is tomorrow. You can let the TLC know what you think. I hope you do.

New & Worth a Read

• Can removing highways fix America’s cities? 

• More evidence that the pandemic is accelerating exurban expansion. Related: what if commuters never come back? 

• The case for parking reform, from Matt Yglesias.

• BNEF releases their annual Electric Vehicle Outlook. Related: peak internal combustion may already be years behind us.

• A far too positive piece on flying cars makes it to the New York Times - I’m hoping to respond in a future post.

• GM is getting into ebike deliveries.

• Proterra, a US leader in electric busses, goes public via SPAC.

• The Hewlett foundation releases a new 5 year strategy for zero emission transportation. 

• Global maritime transport risks becoming the laggard on decarbonization. 

• United plans for supersonic planes. Might make their ‘net zero by 2050’ pledge a bit harder? Related: airlines are a long way from real emissions reductions.

Till Next Time,

Andrew