Dr. Ashley Nunes is an academic at the Massachusetts Institute of Technology and Harvard University, previously he lead research projects sponsored by the Department of Defense and the Department of Transportation. In this article, he argues that electric cars are not the answer to ride-sharing’s emissions problem.
We're going green. Well, Lyft is anyway. The $10bn ride-sharing giant recently unveiled plans to only allow electric vehicles on its platform by 2030. After that, all rides on its platform will be powered by electric batteries. Gasoline, it was nice knowing you.
Lyft’s all-electric pledge comes amid mounting concerns over auto emissions. Fossil fuel powered vehicles produce dangerous toxins, exposure to which can damage lungs, worsen pre-existing medical conditions and contribute to climate change. Ride-sharing companies have drawn particular ire in this regard. Research suggests they disproportionally contribute to air pollution compared to private car rides. Going electric is one way to temper these criticisms.
Standing in the way, however, is cost. Electric cars remain pricier than their gasoline-powered counterparts. That’s a problem, particularly for ride-hailing drivers who must cover their own expenses. Lyft’s solution? To make electric vehicle economics more compelling, so compelling in fact that, according to the company’s sustainability chief Sam Aarons, drivers will be “basically jumping out of their chair at the opportunity to drive an EV.”
Lyft’s formula for success relies in large measure on two things: first, the use of government incentives to spur electric car purchases by Lyft drivers. And second, a fervent expectation that manufacturing costs will fall. I wouldn’t bet on either.
For one thing, using taxpayer cash to boost electric car sales is a questionable practice at best. Studies consistently show these programs mostly benefit the wealthy. The Congressional Research Service — a US government think-tank — found electric car subsidies mostly benefit high-income taxpayers; specifically, those making more than $100,000 annually. The problem? Drivers for companies like Lyft earn far less. Exactly how much these drivers earn is anyone’s guess. Ride-sharing companies frequently resort to numerical gymnastics when asked about it.
A larger problem with Lyft’s green ambitions is the expectation that manufacturing costs will fall. The idea — a key talking point of electric car advocates — relies on the so-called ‘learning effect.’
The underlying premise is simple. New knowledge creates new technology. New technology in turn allows for manufacturing efficiencies which ultimately drives down cost. The idea isn’t without merit. Cell phones, for example, cost a fraction of what they did decades ago, thanks in large part to technology-driven manufacturing improvements. But where electric cars are concerned, manufacturing efficiency is only one part of the problem. The other is material cost.
Electric cars rely on batteries to run. These batteries are made from pricey rare earths like cobalt, nickel, and lithium which collectively account for a hefty part of a vehicle’s production cost. And that’s a problem. Because the cost of the battery cannot be less than its high-priced components, relying on just manufacturing efficiencies to bend the cost curve is ultimately a fool’s errand.
That’s exactly what a recent study finds. The work — led by MIT’s I-Yun Lisa Hsieh — scrutinises the true cost of producing electric cars. She finds these vehicles will remain “still too expensive to truly compete with (conventional autos), due primarily to the high prices of cobalt, nickel, and lithium.” Learning, Hsieh aptly notes, “only buys you so much.”
There is way to curb auto emissions, it’s called raising fares.
A hallmark of the ride-sharing industry is discounts. Companies like Lyft can’t stop offering them and riders can’t stop using them. Yet discounted fares, by virtue of stimulating more demand, also produce congestion. One study finds that over the past few years, ride-sharing platforms have become, “the biggest contributor to growing traffic congestion.” And more congestion means more auto emissions.
If ride-sharing companies really want to go green, they should start by reining in discounts. Not only would the move boost the bottom line but it would also curb demand. Less demand would also mean fewer cars for hire (hardly a bad idea given the majority of ride-sharing enthusiasts already own vehicles) and ultimately, less pollution.
Why wait till 2030 for clean air when we can have it today.
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June 22, 2020 at 05:25PM
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Ride-sharing’s electric delusion - FT Alphaville
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