Before Uber (NYSE: UBER) and then Lyft (NASDAQ: LYFT) came onto the scene, traditional taxi cabs reigned supreme on the roads. However, the ride-hailing apps quickly edged out taxi cabs as they allowed for speed and flexibility that taxis just couldn’t match. As long as you had the Uber or Lyft app, you could order a ride and have it there within just a couple of minutes.
After nearly a decade in the game, ride-hailing apps are now facing mounting competition from electric vehicles. With the country on track to electrify its transportation sector as part of its environmental conservation efforts, fleets will be among the first to be disrupted and eventually replaced with EVs.
As it stands, Uber and Lyft do not own the vehicles their drivers use; they only provide the app. While this business model seemed evolutionary when ride-hailing companies hit the market, it is now a liability because they cannot force their drivers to ditch their petrol and gas-powered cars for zero-emission electric vehicles.
Furthermore, the companies do not have any EVs and charging infrastructure of their own, putting them at a severe disadvantage to companies that can purchase EVs and install a central hub for the fleet where they can recharge. Given the increasing interest in electric fleets, Lyft and Uber are bound to experience stiff competition from companies keen on cornering the EV fleet segment.
For instance, Revel, a New York-based dockless electric moped-sharing startup has launched a ride-hailing service in New York City with a fleet of custom-painted Tesla Model Ys and a crew of 150 drivers and fleet maintenance operators. They will be treated as full-time employees with a guaranteed wage and an assortment of benefits. Revel’s fast-charging superhub in Brooklyn, complete with 25 Level-3 fast chargers, will be used to charge the EV fleet. Alto, a ride-hailing company with operations in Dallas, Miami, Houston and Los Angeles, has raised at least $45 million to fully transition its luxury fleet of white-branded vehicles to EVs by 2023.
Alto plans on eventually replacing all its existing cars, numbering more than 3,000, with electric vehicles. The ride-hailing startup will also extend its operations to the rest of the country. Another company that has integrated electric vehicles into its fleet includes Las Vegas-based Kaptyn, a premium electric taxi service with 150 full-time drivers. However, Kaptyn provides prearranged trips rather than on-demand ones.
Even though companies like this make for an extremely small percentage of the ride-hailing segment, they are a sign of the evolving landscape. As EVs become cheaper and the country’s public charging infrastructure is beefed up, you may see a lot more electric taxis on the road.
It is interesting that Lyft and Uber are going to get a taste of their own medicine from the likes of Kandi Technologies Group Inc. (NASDAQ: KNDI) in just the same way in which they disrupted the traditional taxi-cab business.
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