The Gig Economy's Business Model Is a Roadblock to Fighting Climate Change

Uber and Lyft won't electrify a fleet they don't own, and so gig companies want the public to foot the bill.
May 19, 2021, 3:20pm
The Gig Economy's Business Model Is a Roadblock to Fighting Climate Change
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Last week, the California Air Resources Board (CARB) unveiled proposed rules that would require nearly 90 percent of all ride-hailing vehicle miles to be completed by electric vehicles by 2030. The only problem: the vehicles that ferry passengers around for Uber and Lyft are owned by average people who are considered independent contractors by the gig companies they work for. 


Now that an influential government agency is taking steps to force Uber and Lyft to assume some legal responsibility for the rosy pledges they have already made, Uber and Lyft are pushing back and asking that taxpayers foot the bill instead. After all, the core business model of the gig economy externalizes as many costs as possible, and the independent contractor status of drivers means companies won’t electrify a fleet of vehicles they don’t own. 

Ride-hail trips are being targeted by the proposal because while they only accounted for just over 1 percent of all passenger vehicle miles in the state in 2018, their carbon intensity is far higher because drivers spend a significant amount of time cruising without passengers between trips or waiting for new ones. 

In statements to Reuters, both Uber and Lyft argued the cost of an electric transition should be borne by taxpayers. Lyft added that more subsidies were required because electric vehicles are currently only affordable for "typically high-income white homeowners" yet most Lyft drivers in California are low-income and non-white. The companies want a suit of subsidies that would make acquiring an EV cheaper for the general public, but also provide heavy subsidies for ride-hail drivers specifically. 


Lyft, for example, wants to negotiate with auto manufacturers to ensure drivers can lease or purchase EVs at or below the typical cost of ownership. They're also seeking tax incentives for Express Drive rental partners' vehicles, an expansion of tax credits and rebates, and ride-hail focused charging infrastructure.

“We're committed to reaching our goal, which we set less than a year ago,” Lyft told Motherboard in a statement. “We've recommended various incentives, including investing in TNC driver-focused EV charging infrastructure (L2 overnight charging and DCFC stations in urban and traditionally underserved areas), and removing the fleet cap on the Clean Vehicle Rebate Project (“CVRP”). For the latter, when the fleet cap was removed in Colorado, we deployed 200 EVs for drivers to rent through the Express Drive program.”

Uber did not respond to Motherboard’s request for comment.

In an analysis for Reuters, the Union of Concerned Scientists pegged the transition at $1.73 billion--a pretty penny for two companies that have never seriously come close to earning a profit at any point in their decade-plus histories, but also a fraction of what the companies have sunk into their quixotic quests to replace drivers with computers, the false promise that underpinned their inflated market values in the heady 2010s that both companies have given up on in recent months. Still, the Reuters analysis anticipates drivers could save over $1 billion by cutting maintenance and fuel costs after going electric while only costing the companies an additional four cents per mile if they foot the bill themselves.


The gig companies seem intent on doing everything to turn their fleets electric except put up the money themselves. Last September, Uber "pledged" to shift its fleet to 100 percent electric vehicles by 2030. To do this, it offered not to pay drivers to trade in their gas guzzlers, but to make electric vehicle trips more expensive. A new "Uber Green" surcharge would be introduced that would cost riders a dollar more, but give drivers of hybrid or electric vehicles an extra 50 cents per ride (and another dollar if the vehicle is battery-electric). 

On the same day, Uber also released a Climate Impact report which quietly cast serious doubt on its claims that it could ever achieve its lofty goals. Uber admitted it was "less climate efficient than average-occupancy vehicles" and its "carbon intensity" was 41 percent higher. As former New York City transportation planner Bruce Schaller told The Verge at the time, Uber's carbon emissions were still "rising steeply" because ridership had grown by 36 percent during the studied period. 

Things get even worse when you factor in Uber’s conclusion that "barriers to electrification remain high" because of low adoption rates (0.15 percent of all trips are done by battery EVs), EV acquisition costs, and a general lack of charging infrastructure, all of which conspire to lock cost savings for drivers behind an intimidatingly high barrier.


We see something similar with Lyft, where the company appears to be committed to an electric transition but actually has no feasible or realistic roadmap beyond making someone else pay for it. Just last year, when CARB was proposing a 60 percent target for fleet electrification, Sam Arons—Lyft's head of sustainability—told Wired that "CARB should continue to be aggressive." Lyft also announced a "commitment" to hit 100 percent electric vehicles by 2030 and claimed that "meeting our commitment is on us, not on drivers." And yet, like Uber, Lyft is more interested in securing public subsidies to incentivize drivers to make the switch instead of eating the cost themselves.

Of course, Uber and Lyft are not alone among corporations asking for subsidies or other government assistance to support climate initiatives. And, to be sure, the government has a front-and-center role to play in fighting climate change. But what is different about the gig economy is that its business model is top-to-bottom designed to ensure companies never have to take responsibility for major elements of their operations. 

In the ride-hail business model, all costs must be externalized. Labor costs such as a minimum wage and health insurance are minimized, foisted onto the driver, or placed on the taxpayer’s whenever possible. The same will go for the cost of the unlikely 2030 electric transition both companies are promising, if they get their way: riders will be expected to pay more for electric trips, taxpayers will be expected to pay for cheaper EVs, and the ride-hail companies will do their best to block any programs that will expect them to prioritize electrification over ridership growth and market share consolidation. 

In a recent report on the painfully slow electric transition at Uber and Lyft, one analyst told Bloomberg: "We're seeing no evidence that the ride-sharing companies are making an investment in drivers to help fund a transition to electric vehicles."

The gig economy’s business model has put drivers in debt traps, undermined public transit, perpetually cut wages, made pollution worse, and degraded traffic conditions in cities worldwide, all despite the fact that Uber and Lyft spent their early, heady years promising to do the opposite. Now, that same business model is putting up yet another roadblock to addressing climate change.