Electric Taxis Are On Their Way
Several months ago, Canada’s first all-electric taxi service launched in Montreal. Téo (short for Transport Écologique Optimisé,) is currently in the midst of trial runs with a fleet of 50 EVs, consisting of the Nissan LEAF, Kia Soul EV and Tesla Model S. Téo plans to have roughly 2,000 EVs on the streets of Montreal in 2019, competing with the likes of Uber and Lyft.
For the Montreal city government, that day likely can’t come soon enough. The city is currently locked in a clash with Uber, which it sees as an illegal operation and accuses of shorting the local government on taxes. What’s more, many see the incursion of the “sharing economy” into the taxi market as undermining licensing and oversight in an industry both drivers and passengers benefit from seeing regulated. Téo says it will pay drivers a starting wage of $15 per hour plus benefits, which Uber and Lyft don’t offer.
Beyond the local battles over ride-sharing, Montreal lawmakers even bigger incentive to support plug-in taxis: emissions. Climate change is becoming an increasingly important issue to voters, and Montreal has already put in a place a law forcing licensed taxi fleets to replace their vehicles with low-emissions alternatives like hybrids and plug-ins. The city predicts the law will cut emissions from cabs by 25 percent and save drivers $19 million per year in fuel costs.
In a city like New York—which has a population five times that of Montreal—the impact of greening taxis would be far greater. New York’s notorious congestion leads to a lot of idling and stop-and-go driving, which is terrible for fuel economy and emissions in most vehicles. After a long process though, New York City has committed to use the Nissan’s NV200 small cargo van as its legally-mandated “Taxi of Tomorrow.”
Any possibility of increasing the number of conventional hybrids in NYC’s taxi fleet is now gone. City Hall, which has been enthusiastic about plug-ins since their reemergence on the market in 2011, is working to ensure that the next generation of New York cabs plug in. To that end, the city deployed a test fleet of six Nissan LEAF taxis back in 2013 to study how EVs might mesh with the duty cycles of a typical cab. Nissan provided the cars, as well as several DC quick chargers, which allowed the cabs to charge to 80 percent in 30 minutes. For shorter range EVs like the LEAF, access to fast charging may be a necessity for taxi use.
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Why Do EVs Make Good Cabs? What are the Drawbacks?
The most obvious benefit to plug-in taxis is cutting fuel cost. With gas prices at decade lows though, the financial advantage of cutting gas consumption is a lot lower than it was a few years ago. If the instability of oil prices we’ve seen over the last holds true though, gas prices could rebound at any time.
Of course, fuel cost savings aren’t the only attractive benefit to including plug-in vehicles in a taxi fleet. Most estimates place the cost of maintaining an EV 35 percent lower than a gasoline vehicle. While this is a nice bonus to the average EV driver who generally travels about 12,500 miles per year, taxi drivers usually rack up 50,000 – 100,000 miles per year—meaning that maintenance costs can be 8.5 – 10 times higher. Using a 2008 estimate that placed maintenance costs at about 4.5 cents per mile, that could translate to savings of more than $1,500 per year for a cab.
Less rosy are the outlooks for depreciation and charging station cost. Electric vehicles currently retain less value than other kinds of cars, and their batteries also lose range over time. Since electric cabs tend to use every available mile that lost range translates directly to less fares. Buying and installing DC fast-chargers needed to cut charge times can also cost several times as much as a vehicle itself—though several cities and utilities have partnered with taxi companies to subsidize or reduce the price of those installations.
The Business Case Will Only Improve
Even though gas prices are currently low while vehicle and charger costs high, the business case for taxi companies utilizing electric vehicles is likely to get a lot better in the coming years. As vehicle and charger costs decrease and oil prices increase with time, companies with investments in plug-in taxis experience using them will be at an advantage against their more complacent competitors. All the while, the range and available model options of plug-ins will continue to improve, boosting duty cycles and revenues for each shift.
Investing in electric fleets now instead of waiting for the next oil price spike positions companies to immediately benefit from gas price increases in the future—and helps hedge losses those spikes might inflict on their gas-powered vehicles.
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