The California Air Resources Board (CARB) proposes that ridesharing companies should account for 90% of EVs (Electric Vehicles) by 2030. Already, LYFT Inc (NASDAQ:LYFT) and Uber Technologies Inc (NYSE:UBER) set a goal to switch to EVs by 2030.
Ridesharing companies demand subsidies
The clean air regulators in California proposed a rule that all Lyft and Uber trips should be EVs. However, ridesharing companies demand more subsidies to pay for EVs. They further said more tax money is required to operate a complete EV fleet.
Conversion cost at $1.73 billion
In 2018, EVs accounted for just 0.8% in California. The Californian regulators want EVs share to increase to 90% by 2030. It is a lesser target compared to the combined commitment of ridesharing companies. According to the concerned scientists, the conversion cost will reach $1.73 billion by 2030, even after considering the government subsidies.
Lyft and Uber recently won a case against the regulators that mandate drivers to be converted as employees. They received a ruling in their favor to maintain drivers as independent contractors.
The business model of Lyft and Uber pose the biggest challenge to convert all of their fleets into EVs. Their drivers own vehicles and operate at their will to earn as much as possible. However, those working full time do not make much to pay upfront for EVs.
A driver, who works for Lyft and Uber, most drivers purchase used vehicles because of their poor credit score and expensive car loans.
In a letter to CARB in December 2020, Uber said the mandate to use 90% of EVs could not be possible without sufficient subsidies from the government. It will cause a significant burden on raid hailing companies, consumers, and drivers.
In a communiqué to Reuters, Uber said neither a single company nor the government could bear the cost for rapid transition. According to Lyft, the taxpayers should provide support for the transition. Lyft further said the government subsidies are just sufficient to produce EVs for high net worth individuals. Most of the Lyft drivers in California are in the low-income category and could not afford to transition to EVs.
Both Uber and Lyft report revenues in billions of dollars. But they have not posted any profits after decades of operation.