Climate

Uber’s fight to shift drivers to EVs will be a massive uphill battle

The ride-hailing giant has set an ambitious goal to get its drivers in EVs. Now, it just has to figure out how to meet it.

A scale with an Uber logo and the Earth with EVs on the other side.

Uber could tip the scale toward EVs — or leave it hopelessly broken.

Christopher T. Fong/Protocol

When Uber launched in 2010, the company offered just one service: A driver in a large black luxury car would drive to where you were and take you where you wanted to be. It was cool and luxurious, and no one really thought much about the potential environmental impacts. But when Uber started rolling out carpool services in 2015, some researchers commended it and other ride-hailing companies for creating a new and innovative way to reduce air and carbon pollution.

But after more than a decade, ride-hailing has had the opposite effect. Uber, Lyft and their smaller competitors have caused significantly more congestion on urban roads, and the services have also prompted drivers to spend more time idling in their vehicles. That has led to an increase in carbon emissions, especially because people are choosing cheap car rides over public transit, bikes and walking.

Uber doesn’t deny the problem it created. In fact, it says it wants to be part of the solution by getting more of its drivers into electric vehicles. Doing so would have an outsize impact on personal-transportation-related carbon pollution; each ride-hailing driver in an EV would reduce emissions impact by about three times more than if an average person switched from a gas-powered car to an EV.

“It actually makes a lot of sense to try and target Uber and Lyft drivers, and the reason for that is that they drive so many miles,” said Alan Jenn, an EV researcher at the Institute of Transportation Studies at the University of California, Davis. “If I took the average Californian and put them in an EV, you get some emissions savings. If you did the same thing for Uber and Lyft, you end up getting about 3.5 times the number of emissions savings.”

Because the facts are so indisputable, Uber is now stuck in the middle of a mess somewhat of its own making. But it’s also a challenge that extends far beyond one tech company and is about much more than ride-hailing services. The company wants all of its drivers to use EVs eventually, but the price of those vehicles compared with the low wages its drivers earn mean it’s exceedingly unlikely the average Uber driver will roll up to your doorstep in a Chevy Bolt or a Tesla anytime soon. Widespread EV adoption would dramatically reduce one of the world’s biggest sources of carbon emissions — cars. As long as EVs remain a luxury, that change will not happen.

Uber has committed $800 million to try to make EVs more accessible and says it plans to be carbon-neutral in the U.S., Europe and Canada by 2030, and globally by 2040. But getting to zero vehicle emissions in less than eight years in the U.S. is just going to be hard.

As one former Uber executive explained to Protocol, the central problem for Uber is that getting drivers into EVs would be very costly, and the company does not have the money to buy new cars for the more-than-1-million drivers in the U.S. alone. Uber has never made a profit on a yearly basis, though it did report its first quarter of adjusted profits in November 2021.

“They have nearly no control over driver car choices and consumer preferences, but can use money to influence that. But that is also tough in a world of no profits,” the former executive said.

Most software and hardware companies don’t have massive, easily measurable carbon emissions that have an obvious solution. That puts Uber in a fairly unique position, making it one of the few tech companies with a readily visible source of carbon pollution and an equally visible solution. Whether it succeeds or fails at its goal will go a long way toward defining the EV future.

The winding road to Uber’s EV policy

Uber committed to transitioning its fleet to electric and zero-emission vehicles by 2040 in September 2020, becoming the first major tech company to commit to true net-zero emissions without relying on carbon offsets. The company also promised to dedicate $800 million to meet that goal, a number that Adam Gromis, Uber’s public policy manager for sustainable impact, told Protocol he believed was a good starting point but wouldn’t get the company 100% of the way to its goal.

That commitment was driven, in part, by policy shifts to phase out internal combustion engine vehicles and hold ride-hailing companies accountable for their part in rising emissions, mainly in Europe and California (where Uber is headquartered). California regulators and politicians spent years crafting a mandate that would require nearly all newly purchased vehicles to become fully electric by 2030, including those from ride-hailing services. The prolonged death knell for gas-powered vehicles began to toll in 2018, when the California legislature passed the clean mile standard, targeting the outsize emissions impact of the transportation industry. Transportation is the largest source of carbon emissions in California, accounting for half the state’s emissions. (It’s also the largest chunk of carbon emissions in the U.S. at around 30%.) The law mandated that by 2030, 90% of vehicle miles driven by ride-hailing fleets would need to be in EVs, meaning most ride-hailing drivers would be required to use EVs.

This wasn’t a surprise for Uber, which had been — and remains — heavily involved in discussions with regulators about what that would look like, according to Jenn. (Jenn is also regularly involved in discussions about how these regulations will be enforced). Uber has more than 200,000 drivers in California.

Almost one month after Uber announced its 2040 EV commitment in September 2020 (and two years after the California law passed) California Governor Gavin Newsom announced an EV mandate for all new vehicles sold in the state by 2035. Less than a year later, the California Air Resources Board approved the first standards that would require companies like Uber to report their progress toward electrification. That work remains ongoing, including workshops to figure out how to comply with the law.

“It will be hard,” Jenn said. “[Uber is] going to have to reach into their pockets at some point, because they are not going to be allowed to operate otherwise. The government agencies are trying to provide some support, but at the end of the day they are going to have to come up with a way.”

How to get ride-hailing drivers in EVs

For Leah Lazer, deploying EVs is no longer a technological problem. Lazer, who studies urban mobility and EVs at the World Resources Institute, has worked closely with Gromis and the climate team at Uber on researching how to get ride-hailing drivers into EVs in a fair and equitable manner.

“It’s really much more of an economic and political question than it is a technological question. The technology honestly is really already there. The question is, [is] the cost going to come down enough for it to be affordable enough for this transition to happen?” she said.

There are three main barriers for drivers to get into EVs, especially in the U.S.: the up-front cost of the vehicles, cost and access to charging and understanding the tax and financial benefits available to EV owners.

Uber doesn’t have the cash to buy EVs for all of its drivers, but Lazer also doesn’t think that’s a practical solution. Uber’s business model requires most drivers to use their personal vehicles for work, meaning that to make simply giving drivers cars cost effective, Uber would have to require the drivers to actually use the cars for a set period of time — an idea that runs counter to the flexibility the company touts.

A more viable alternative is the company helping people buy their own cars. Most EV owners tend to be wealthy: The largest demographic of EV owners is white men with an income above $100,000, and EV adoption rates sit anywhere from two to five times higher in high-income zip codes than lower-income ones. Most low-income drivers for ride-hailing services don’t consider the market accessible for them, according to Gromis.

The up-front cost of new EVs is usually beyond what Uber’s drivers can afford. Drivers usually purchase their cars used, yet there is no robust used-car market for EVs, given they’re still relatively new. While Uber does also help some drivers lease cars, including electric ones, the majority of drivers don’t rely on leases.

Tax incentives and subsidies could help make EVs more accessible as well; in California, for example, lower-income drivers get an additional $2,500 rebate for EV purchases on top of the ones available to everyone else. Of the three main issues, understanding the benefits is the one Uber has significant power to attack. Most drivers don’t know those subsidies exist or how to access them, and Lazer and Gromis both said that Uber could invest in educational tools to change that. The company already provides an online calculator for drivers to game out the costs of buying an EV and the available incentives based on where they live and what kind of access to charging they might have.

The cost of charging also needs to make up for the higher up-front cost of the vehicle. Overnight slow charging at home is far more efficient and cheaper than fast charging stations like those scattered at gas stations and in parking lots across the country. For people who live in single-family homes, that kind of charging is straightforward to access. But drivers in major cities or those who live in low-income areas are more likely to live in multifamily units, which don’t always provide access to affordable electricity and slow-charging stations. If EVs are going to become common for Uber drivers, that needs to change.

Part of the $800 million Uber has dedicated to the EV transition has been used to cut deals with charging companies for lower rates for fast charging to Uber drivers. President Joe Biden also recently announced a program giving out $5 billion to states to expand their charging networks, which could put more drivers closer to the infrastructure they need to make getting an EV viable. But getting slow charging stations installed at apartment complexes and multifamily homes is more of a local policy challenge. While Uber can advocate for favorable policies, cities and municipalities across the country have to agree to invest the money to make the changes.

That’s the ultimate problem with Uber’s commitments. Gromis and Brooke Anderson, an Uber spokesperson for the climate team, are both fond of using the phrase “team sport” to describe their climate commitments. Multiple times in conversations with Protocol, both returned to that idea. The former Uber executive who spoke with Protocol described it similarly. That executive believes that policymakers have to accept a certain responsibility for creating an environment where this transition is possible. “The question is how much responsibility should [Uber] be expected to take, and what share should the public, if any, bear, given that public policy itself has historically encouraged car-oriented transportation,” they said.

That question itself gets at what one of the tensions of a more climate- and people-friendly transportation system would look like. Car-centric development isn’t just a climate problem; it’s also one that can worsen air pollution and congestion, reduce public safety and fragment cities. Some policies and priorities across the pond could show a path forward for electrifying ride-hailing services while trying to reduce the number of cars on the road.

Gromis praised policymakers in London and cities across Europe for their aggressive approach to electrification compared to those in the U.S. Uber’s data on EV ride-hailing in London and other major European cities shows that ride-hailing drivers in Europe are choosing electric cars five times faster than private car owners, and eight times faster in London. That’s in part because London and other European cities have very strict congestion charges for gas- and diesel-powered vehicles that make operating them very expensive, making EVs a more economical choice in contrast. Because Uber also needs a license to operate in European cities like London and pollution could lose them that license, the company has created a “clean air fee” system that makes rides a bit more expensive and puts the additional money into a pooled savings account for EVs, which drivers can then use to help pay for the cost of an EV based on how many miles they’ve driven.

“Once the total cost of ownership of an EV is below a used Prius — which is the real competition — drivers make the switch. Drivers are hyper-rational, very smart, they are optimizing for that take-home pay,” Gromis said.

The final leg of Uber’s sustainability commitments isn’t just about drivers or electrification. Anderson emphasized repeatedly that Uber believes that encouraging people to use its other micromobility options, like scooters and electric bikes, will play an important part in ensuring the company actually achieves net-zero emissions. Those transportation options have a much lighter carbon footprint and require fewer raw materials to create, making them even more sustainable options.

In the long-term planning for sustainable transit, there may need to be less ride-hailing in general. Lazer described a hierarchy of ways to make travel better for the climate. The first is to create more dense, walkable cities so we avoid the need for so many driving trips in the first place; the second is to shift to more sustainable modes like public transit, walking and cycling; and the third option is to improve the few vehicle trips that remain. While cars will almost surely be a part of the future, transportation policies that ensure cities are just and climate-friendly will have to include — and even prioritize — other means of getting around. If Uber wants to be part of that future, those bikes and scooters are going to become far more important over time.

And while there probably should be fewer Uber rides in the long run, “improving can mean more efficient vehicles, more electric vehicles, shared rides. You want them to be shared, you want them to be in use as much as possible, and you want them to be electric. And I think those three are very aligned with ride-hailing,” Lazer said.

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