Electrify Taxis in New York City

Home , Boro taxi, BYD e6, Electric car, Electric vehicle, Gett, Hybrid vehicle

Zehua Guan, Zora Xiang, Beiwen Shen, Xuechun Bao, Bojun Chen

ETaxi NYC

May, 2020

Table of Contents

I. Status quo in New York City ...... 2 1. NYC taxi industry ...... 2 2. Electrification progress ...... 4 3. Policy timeline ...... 6 II. Stakeholders Analysis ...... 7

III. Case Studies ...... 10 1. Shenzhen Case ...... 10 2. Taiyuan Case ...... 18 3. London Case ...... 19 IV. Identified Problems ...... 23 1. Charging Infrastructure ...... 23 2. Drivers' Willingness ...... 25 3. Profit Analysis ...... 27 V. Recommended Solution ...... 33 1. The pilot program ...... 33 2. Ancillary policies ...... 33 3. Infrastructure ...... 34 4. Financial Support ...... 35 VII. Limitations and Further Research ...... 38 VI. Acknowledgement ...... 38

I. Status quo in New York City 1. NYC taxi industry 1.1 Scale of fleet By the end of 2019, New York city has a total number of 133,532 Vehicle Licenses and 197,998 Driver Licenses. There are 130 total business Licenses in the city, including 20 taxicab brokers, 71 Medallion Agents, 3 technology service providers and 6 E-hail providers.

The fleet is composed of mainly three types of taxis, Medallion taxis (yellow taxis), Street Hail Liveries (green taxis) and For-Hire Vehicles. Medallion taxis and SHLs can both be hailed in streets, while SHLs cannot pick up customers in Manhattan below E.96th St. and W.110th St. FHVs can only provide prearranged services. FHVs entered the market in 2015, and has experienced an explosively increasing number of active drivers. By 2019, more than 83,000 drivers now drive for the three largest For-Hire Vehicle companies in New York City, which operate through the apps Uber, Lyft, and Via, these three companies account for over 91% of For-Hire Vehicle trips.

Table 1 NYC Vehicle & Driver basic information1

Vehicle Daily average Active Drivers by Term Explanation Licenses by number of June 1st, 2018 20192 trips 2018

Medallion Yellow Cabs 13,587 29,362 296,295 Taxicabs

Street Hail Liveries, aka Green SHL 3,004 3,979 26,029 Taxi (Boro Taxi)

For-Hire Vehicles, including Black FHV 116,449 91,918 80,259 car, Livery and Luxury Limousine

For vehicle type also includes Standby Vehicles in street hail Total service, Paratransit Vehicles & 133,532 125,259 402,583 Commuter Vans in Prearranged Services

1.2 Taxi fare mechanism

1 New York City Taxi & Limousine Commission, “2018 Fact Book,” February 14, 2019, https://www1.nyc.gov/assets/tlc/downloads/pdf/2018_tlc_factbook.pdf.

2 New York City Taxi and Limousine Commission, “2019 Annual Report,” https://www1.nyc.gov/assets/tlc/downloads/pdf/annual_report_2019.pdf.

NYC’s yellow and green taxis are currently using the Standard Metered Fare Mechanism for fare charges. The calculation starts with a $2.50 initial charge plus $1.00 per mile or per minute in slow traffic, added by $0.50 MTA surcharge, $0.30 improvement surcharge, $0.50 overnight surcharge during 8pm to 6am. Customers will also be charged an additional $1.00 for riding in rush hours on weekdays (4pm to 8pm), and a New York State Congestion Surcharge differentiated by taxi types if the trip starts or passes Manhattan south of 96th Street.3 Taxi trips between Manhattan and John F. Kennedy Airport are charged a fare of $52 regardless of total distance or time, plus the same MTA and improvement surcharge, while charged $4.50 for rush hour operation instead.

Majority of taxi trips in NYC are within short distances. In 2018, 73.9% of yellow taxi trips were within 3 miles, and the number for SHLs was 70.0%. Few rides reach more than 10 miles, 5.9% for yellow taxis and 3.1% for SHLs. According to figure 1, we can see that the average taxi fare per trip reaches its highest in the latter half of the night and during rush hours in the afternoon. Yellow taxis charge higher during the night. And as FHVs are majorly operated by large app-based companies, data on their average fares remain hard to obtain.

Starting in March 2018, TLC has been encouraging yellow and green taxis to explore new business models by setting the upfront fare pilot, like app-based taxis, with the participation of TLC-licensed E-Hail app companies. The pilot officially began on June 27, 2018, but adoption of the pilot seemed slow.

Figure 1 NYC 24-hour average per-trip taxi fare fluctuation on Mondays in 2018 4

$19.00 $18.00 $17.00 $16.00 $15.00 $14.00 $13.00 $12.00 $11.00

$10.00

0:00 1:00 2:00 3:00 4:00 5:00 6:00 7:00 8:00 9:00

11:00 15:00 19:00 10:00 12:00 13:00 14:00 16:00 17:00 18:00 20:00 21:00 22:00 23:00

Medallion SHL

1.3 NYC Taxi drivers NYC has a diversified group of taxi drivers. Over 50% of the drivers are from Bangladesh, the Dominican Republic, Pakistan, the US and India, while six languages are majorly spoken: English, Spanish, Bengali,

3 Congestion Surcharge: $2.50 for Yellow Taxi, $2.75 for Green Taxi and FHV, $0.75 for any shared ride.

4 New York City Taxi & Limousine Commission, “2018 Fact Book,” February 14, 2019, https://www1.nyc.gov/assets/tlc/downloads/pdf/2018_tlc_factbook.pdf.

Urdu, Russian and Simplified Chinese. Over 95% of them are male under the age of 50, and there has been a decreasing trend of average age. Among different types of taxis, 58.3%-63.8% of drivers live in Queens and Brooklyn, and in total over 85% drivers live in NYC.

2. Electrification progress 2.1 EV market Penetration NYC has a growing number of Electric Vehicles, dominantly private-owned. The number of electric vehicles on the road reached 9,172 in 2018. The number of Battery Electric Vehicles (BEVs) and Hybrid Plug-In Vehicles (PHEVs) are similar, majorly located in Manhattan and Queens. The most popular BEV models are Tesla Model S 705, Tesla Model X 619, Tesla Model 3 375, Chevrolet Bolt EV 195 and Nissan Leaf 152.

Several State and City policies have worked in favor of this development, such as the Drive Clean Rebate providing NYC residents more than 14,000 rebates up to $2,000 for purchasing a new EV. Con Edison and National Grid, the two utilities operating in NYC, also provide Time-of-use (TOU) rates allowing residents to save money on electricity bills when they charge their EVs during off-peak hours (12 am to 8 am all year round), during which electricity is cheaper.

Table 2 Number of Electric Vehicles in NYC 5

Brooklyn Queens Manhattan State Island Bronx Total BEVs 992 1362 1739 323 272 4688 PHEVs 827 1824 1077 548 208 4484 Total 1819 3186 2816 871 480 9172

2.2 Taxi-related regulations While there’s no certain restriction on SHL vehicles at present, all yellow taxis in NYC must use a vehicle choosing from the TLC-approved list of car models. Until the time this report is written, TLC has approved 10 hybrid vehicle models and only 1 EV model (Tesla Model 3) for yellow taxis. All yellow and green taxis are printed and marked by the only one authorized organization Memorandum of Understanding (MOU).

5 Atlas Public Policy, EValuateNY, May 3rd, 2020, https://app.powerbi.com/view?r=eyJrIjoiMjQwYTdhNTAtMmI5OC00ZmZkLWJiMDQtNjI0NDM0Y2E4N2QyIiwidCI6IjFiYjQ4ZGE0L TMxNDMtNDAzMS1iZGFlLWNjYzA0MDc1MDhmZSIsImMiOjF9.

Figure 2 Approved car model for NYC Medallion taxicabs 6

2.3 Charging infrastructure NYC is under the process of building charging infrastructure to serve the needs of its enlarging EV fleet. On the state level, the New York Public Service Commission has also initiated a Make-Ready Program providing incentives to light duty electric supply equipment and infrastructure (EVSE&I) for Level 2 and DCFC stations. This program would cover 90% of the costs of charging station construction if all eligibility criteria are met, eliminating major economic barriers for developers. With the help of the make-ready program, most DCFC stations would have a positive 10-year Net Present Value in the first year developed. New York State also supports investments in charging station installations through the Charge Ready NY Program, calling for at least 10,000 public and workplace charging stations to be available by 2021, with

6 New York City Taxi & Limousine Commission, Yellow Cab Hack-Up: Approved Vehicle List, https://www1.nyc.gov/site/tlc/businesses/yellow_cab_hackup.page.

5 priorities to build stations along the State’s highways. In addition, a tax credit of 50% cost (up to $5,000 per station) is offered to public and workplace charging stations.7

On the city level, the Department of Transportation (DOT) has planned for 7 Direct DCFC fast charging pilots throughout the city using the $10 million fund from the city government, building mainly on DOT owned properties. DOT is also working with Con Edison planning to build 100 Level2 curbside charging ports over four years of demonstration, converting regular parking spaces to EV parking. Early results of this initiative are expected to be seen in 2020.

Table 3 NYC Charging Infrastructure by October 2019 8

Time to Fully Number of Number of Charge a 200- Connector Type charging stations charging outlets mile battery

Level 1 (120 V AC) 40 hours - 3 3

Level 2 AC (240 V AC) 8 hours J1772 Connector 325 868 40-50 minutes DC Fast Charging CCS, CHAdeMO, with 50 kW 8 21 (480 V DC) Tesla power

3. Policy timeline New York State has ambitious climate change policies, including commitment aiming at a green and sustainable transportation sector. In the long term, transportation electrification has been identified as one necessary path to help meet the 40% GHG emission reduction goals by 2030.9 As an important part of the transportation system, the taxi industry has also undergone a series of regulation changes. With the current supportive policy environment, electrifying the taxi fleet would serve as an important effort of New York City transforming to a low carbon transportation sector in the future.

7 New York State Department of Public Service, “Electric Vehicle Supply Equipment and Infrastructure Deployment,” January 13, 2020, https://www.coned.com/-/media/files/coned/documents/business-partners/business-opportunities/energy-storage- request-for-proposals/make-ready-report.pdf.

8 New York State Official Website, Electric Vehicle Station Locator, https://www.nyserda.ny.gov/All-Programs/Programs/Drive- Clean-Rebate/Charging-Options/Electric-Vehicle-Station-Locator#/find/nearest.

9 New York State Government, “2015 New York State Energy Plan,”, https://energyplan.ny.gov/Plans/2015.

Figure 3 Policy Timeline of New York State

II. Stakeholders Analysis 1. State Government The state government advocates for building a statewide electrifying transportation system. On January 17th 2020, Governor Andrew Cuomo announced that New York residents can buy electric vehicles with a rebate of up to $2,000. Specifically, the Governor directed the Department of Public Services to consult with stakeholders and propose a ready plan that will provide utility support to accelerate the development of electric vehicle charging infrastructure to meet expectations for electric vehicles in the

7 next five years increase.10 It is emphasized that New York State’s commitment to further encourage electric cars, along with their supporting facilities such as charging stations.

2. City Government The New York City Government is dedicated to electrifying the NYC taxicabs; however, the implementation plan is not processing. Mayor Bloomberg from the last Municipal Government has once set a goal to make one third of New York taxicabs electric by 2020. However, until Mayor Bloomberg retired, this implementation plan stagnated without any improving results in electrifying taxis in the city.11 The city government is the direct policy maker of the plan of electrifying the NYC taxicabs, and also serves as the role of the regulator of different stakeholders. The city government also has a commitment in electrifying the taxicabs in the city. The uncertainty lies in the inefficient executive mechanism and the insufficient budget of the city government.

3. TLC The New York City's Taxi and Limousine Commission is doing a lot of preliminary work in field research, but a lot less in field work. The New York City's Taxi and Limousine Commission serves as the leading governmental agency which was going to conduct Mayor Bloomberg’s implementation plan of making one third of New York taxicabs electric by 2020. TAKE CHARGE A Roadmap to Electric New York City, which analyzed the feasibility of the electric-taxi initiative the day before Bloomberg left office.12 While in this report, TLC collected a load of information and made several suggestions to the city government, such as issuing electric vehicle market assessment for EV manufacturers, testing EV chargers, harnessing relationships with potential fund providers, and making some legal and regulatory changes. However, until today, few recommendations have been really adopted in the practical implementation plan. In our interview with TLC, it is suggested that there exist several problems for processing an electric taxi pilot program such as the range anxiety of EV taxis, the challenge of the driver’s willingness for EV taxis, and the low capacity of public charging infrastructure.

4. MOS The New York City Mayor’s Office of Sustainability (MOS) consists of a group of government consultants that are dedicated to make NYC a place where the air is clean, the streets are green and where the residents produce zero waste and zero carbon. Electrifying NYC’s taxicabs is one of their crucial research projects. In 2017, Mayor de Blasio had instructed the Mayor’s Office of Sustainability to direct a City Electric Vehicle Fleet initiative. To prepare for this initiative, MOS has developed some strategies on complementary partnerships and policies to meet this EV penetration target.

5. EV Manufacturers

10 New York State Government,“Governor Cuomo Announces Make-Ready Program for Electric Vehicles”, https://www.governor.ny.gov/news/governor-cuomo-announces-make-ready-program-electric-vehicles.

11 New York City Government, “Take Charge A Roadmap to Electric New York City”, https://www1.nyc.gov/assets/tlc/downloads/pdf/electric_taxi_task_force_report_20131231.pdf.

12 New York City Government, “Take Charge A Roadmap to Electric New York City”, https://www1.nyc.gov/assets/tlc/downloads/pdf/electric_taxi_task_force_report_20131231.pdf.

According to the experiences of Shenzhen, EV manufactures will benefit from this transformation for: the increasing sales, building up charging systems and related services such as maintenance. However, there are no manufacturers showing significant manufactures trying to enter this market yet. We consider the potential EV manufacturers to be interested in Tesla and Chevrolet. Their influence on this project is limited. It would be great if they want to use this chance to expand their market and invest in it. But if they simply want to sell vehicles, it's no harm for the transformation.

6. Taxi Companies Their jobs include purchasing vehicles, holding medallions and finding drivers. Their business model can be described as renting medallions or vehicles to drivers and earn a fixed rent. However, the price of medallion is going constantly down and the companies which bought them are carrying a burden of failing to fulfill their anticipation of profitability. If they find the transformation adds to their difficulty, they will definitely be against it. Their concerns include profitability, difficulties of changing management, financing of purchasing. They are of crucial importance to the success of this transformation.13

7. New York Taxi Workers Alliance (NYTWA): They are the alliance of taxi drivers and their core position is to ensure a reasonable cap for For-Hire- Vehicles to protect the income of their members. They represent the interest of their members and have influence on the policy. They are of importance to this project.

8. Investors We need to change the flow of investment to change a system. Thus, investors are crucial in providing funding. We know there are some investors who are interested in funding sustainable and low carbon transportation. Considering the feature of EVs and the ambiguous future of taxis, finding appropriate investors can be hard unless the investors are confident about the future. The key points to convince the investors are to provide evidence that the investment is profitable and resistant to risks. They are willing to know the collateral, source of earnings and the risk. They are also of crucial importance.

9. ConEdison ConEdison is the infrastructure provider in NY. The increased demand of capacity brought about by electrification calls for their upgrading of built wire systems, which means a huge amount of investment. However, good news is that the State government has initiated a "make-ready program" which calls the infrastructures companies to make-ready for the installment of charging poles and stations. They are of crucial importance to this transformation.

10. Uber and Lyft They have a similar foundation as traditional taxis but they don't have to pay for the medallion. They are disruptive challengers of the taxi market. For taxi drivers, it is only fair when Uber and Lyft are regulated

13 Sean Bryant, "How NYC's Yellow Cab Works and Makes Money", https://www.investopedia.com/articles/professionals/092515/how-nycs-yellow-cab-works-and-makes-money.asp

9 under same policy. If they change into EVs, it is a large amount of transformation and it can also help to push the traditional taxis to change.

Figure 4 Stakeholder Structure of NYC

III. Case Studies 1. Shenzhen Case Shenzhen is one of the first megacities in the world to electrify all of its taxi fleet. In Shenzhen, there are 64 taxi companies and about 21,700 taxis. Nearly all of them, 99.06% or 21,485 to be precise, have been electrified14. This makes Shenzhen a very important case to the world and especially to our practicum project. Therefore, during the winter holiday from January 9th to January 15th, our team visited Shenzhen and had interviews with government officials, public and private taxi companies, a research institute, and taxi drivers. We also conducted field research in charging stations and driver resting zones. In this part, we will try to figure out the following questions: (1) How did Shenzhen achieve taxi electrification? (2) What are the effects it brings to different stakeholders in Shenzhen? (3) Is there any experience that New York City could learn from Shenzhen? 1.1 How the project is implemented

14 Shenzhen Transportation Committee of Shenzhen Municipality, "Taxis in Shenzhen have been basically electrified", http://jtys.sz.gov.cn/hdjl/zxft/fthg/201903/t20190301_16661370.htm

There are mainly three stages for the Shenzhen Government to promote taxi electrification. Year 2010 to 2014 is called “pilot period”, during which Shenzhen government led BYD Auto and Shenzhen Bus Group to establish the first electric taxi company - Shenzhen Pengcheng Electric Taxi Company, and issued about 800 free licenses for them to operate as a pilot company. The “promotion period” was from 2015 to 2016. During this period of time, state-owned taxi companies are encouraged to utilize the appointed electric taxi indexes and set an example for the whole taxi industry. Year 2017 to 2018 is the “fully electrification period”, Shenzhen government required most taxi companies to adopt electric taxis and about 70% of all city taxis were changed into electric ones in these two years. In the future, Shenzhen may put more emphasis on promoting the intelligent operation in the taxi industry. To achieve the 100% electrification goal, the Shenzhen government issued a series of incentive policies and try to benefit all the stakeholders during this transition. The specific measures are stated as the following. 1.1.1 Subsidies to taxi companies (2017-2018) During 2017 to 2018, for a single electric taxi adopted, the taxi company can not only get 44,000 yuan national subsidy and 22,000 yuan local subsidy, but also 164,800 yuan “one-time extra emission reduction reward” which is unique in Shenzhen, according to our interview with Xihu, the largest private company in Shenzhen. Take BYD e6, the electric taxi car model in Shenzhen, as an example, its market price is 309,800 yuan. But with the subsidies mentioned above, the taxi company can get a BYD e6 at the price of 79,000 yuan/taxi, which is only 25.5% of the market price. In addition, to avoid the economic loss during the replacement and encourage the companies to adopt electric taxis ahead of time, Shenzhen government also came up with the solution named “extra emission reduction by earlier replacement reward”. For example, there is an internal combustion engine (ICE) taxi bought at the price of 100,000 yuan at the beginning of its 5-year operation period, and its salvage would be 80,000 yuan at the end of the 5th year, using straight line depreciation method, it depreciates 80,000 yuan/60 months=1,333.3 yuan/month. If the taxi company chooses to replace the ICE with an electric one in its fourth operating year, then it can get 1,333.3 yuan*12 months=16,000 yuan compensate for this single car. It is worth noting that the maximum compensation a single taxi can get is 32,000 yuan. This reward largely reduces the taxi companies burden on replacement. It is estimated that XIHU, the biggest private taxi company in Shenzhen got 40 million yuan from this policy. 1.1.2 Subsidies to taxi drivers In Shenzhen, taxi drivers do not own taxis but contract with the taxi company and rent vehicles with licenses to have the operating right of the car. Typically, each taxi is operated by 2 drivers and costs are shared (2 shifts/car). Taxi licenses are issued by the government which possess a five-year tenor. Before taxi electrification, the one-time deposit paid by ICE drivers to the taxi company was 90,000 yuan/taxi, and monthly rent was about 15,000 yuan/taxi depending on different companies’ requirements. But now, after taxi electrification, the deposit reduces to 40,000 yuan/taxi and monthly rent reduces to 10,000 yuan/taxi. Besides, each taxi can get a subsidy of 1000 yuan directly from the local government per month, meaning each driver can get 500 yuan, which reduces the taxi’s fixed cost for the drivers to some extent. 1.1.3 More taxi quotas are added and license restriction is canceled Taxi quota is strictly controlled in each city in China. Before taxi electrification, there were about 16,000 taxis in Shenzhen. But now, there are 21,700 taxis in Shenzhen, among which 21,485 are electric ones.

The government aims to motivate taxi companies to adopt electric taxis by adding their taxi operation quotas and creating a scale of economy for them. As respect to taxi licenses, prior to taxi electrification, there were mainly two types of taxi licenses in Shenzhen according to different operation zones and prices - taxis with red licenses can freely drive anywhere, while taxis with green licenses can only drive outside Shenzhen special economic zone. But now, to conveniently manage the electric taxis and create a fairer market environment, all license restrictions are canceled, which is good news for taxi drivers. 1.1.4 Subsidies to charging infrastructures According to the Development and Figure 5 Charging Infrastructures in Shenzhen Reform Commission of Shenzhen Municipal Government, the latest subsidy in 2019 to 2020 on charging infrastructures will decrease because of the lower cost of charging equipment. The construction cost of one charging hub is 1,300 yuan/kW for direct current charging hub and 700 yuan/kW for alternating current charging hub currently. To better balance financial support and market competition, the construction subsidy for direct current charging equipment will decrease from 600 yuan/kW to 400 yuan/kW, and subsidy for alternating charging equipment above 40kW will decrease from 300yuan/kW to 200 yuan/kW; for those alternating current charging equipment below 40kW, the subsidy will reduce from 200 yuan/kw to 100 15 yuan/kW . Besides financial subsidies, the government also provided the land to charging infrastructure suppliers for free at the very beginning of the taxi electrification process to support their development. 1.1.5 Benefits to taxi passengers To make electric taxis benefit passengers, the government canceled the fuel surcharge of taxis and thus the start fee reduces from 13 yuan/2km to 10 yuan/2km, becoming the cheapest in the first-tier cities in China. Adopting electric taxis also became an opportunity for taxi companies to improve service to better attract passengers. In addition, because of the increasing number of electric taxis in Shenzhen, more taxis are in the market now, and it is more convenient for people to take taxis than before. 1.1.6 Mandatory government policies

15 Shenzhen Development and Reform Commission, 2019 年 8 月 28 日《深圳市 2019-2020 年新能源汽车推广应用财政补贴实施细则》(征求意见稿）, http://sf.sz.gov.cn/ztzl/gfxwj/gfxwjyjzj_171008/content/post_2964268.html.

Besides financial stimulation including subsidies and adding operation quotas, Shenzhen government also mandates that all taxi companies must replace all of their ICE with electric taxis by the end of 2019. Combining these policies, it is possible to realize taxi electrification in a relatively short period of time.

1.2 Stakeholders and Reactions towards taxi electrification Other than the government, the taxi electrification process in Shenzhen is most associated with five other stakeholder groups: (1) Public taxi companies (2) Other taxi companies (3) Vehicle manufacturing company (BYD Auto) (4) Charging companies (5) Taxi drivers. A network graph of those stakeholders is illustrated as below. Deeper shades of color (octagons and arrows) shows more powerful influences.

Figure 6 Stakeholders in Shenzhen Taxi Electrification

1.2.1 Public taxi companies Among the 64 taxi companies currently operating in Shenzhen, public companies and large-scale private companies are the biggest winners and the most enthusiastic EV supporters benefiting from the policies and subsidies. Pengcheng, the newly established state-owned taxi company, was responsible for the pilot in 2010. Government-provided free licenses and charging infrastructure for the first batch of electric taxis allowed the company to provide fixed salary for taxi drivers in order to attract volunteers. Without worrying about risk management, Pengcheng operated the pilot successfully. Another advocate is Shenzhen Bus Group Co., Ltd, which is a state-controlled, comprehensive public transportation company owning a sub taxi company called Shengang. The monthly rental fees per electric taxi (8,808 yuan) is lower than a traditional taxi (11,000 yuan), but Shengang compensated this part of loss by expanding its scale from 1,600 taxis to about 2,300 taxis. In addition, because of the abundant capital support from its parental company - Shenzhen Bus Group and its integrated capacity in transportation, real estate, and property management, Shengang can also make profits from by-product

13 industries such as the rest area for taxi drivers beside the charging stations and garages for monthly maintenance fee. 1.2.2 Private taxi companies While public taxi companies embraced electrification, private taxi companies experienced a cut-throat competition and revenue reallocation within the taxi industry and thus have two different kinds of voices regarding the electrification process. A private taxi company named Xihu is one of the biggest winners, who took the fullest advantage of governmental subsidies and reached the scale of economy by replacing all 2,733 taxis with more than 3000 EVs and getting approximately 45% of the cost covered in June, 2018. Xihu supports EVs for another reason - to get the market shares back from the app-based for-hire taxis which invaded Shenzhen taxi markets in 2016-2017. With the increasing number of street-hailed taxis, reduced taxi fees, and improved service quality, traditional taxi companies are more competitive than app-based for-hire vehicles now. The representative from Xihu company told us they will focus more on improving their fleet management capacity through better utilizing big data, which includes operating time, location, income, and charging record provided by digital platforms on each electric taxi. But small-scaled taxi companies are not so welcoming of the policy. As market competition pushes the monthly rental fee to lower levels than before, the main method companies use to compensate for the loss is to scale up. However, small companies lack sufficient capital to invest in new taxis and have difficulties to hire enough drivers for a larger scale due to relatively weak abilities to provide welfare. What’s worse, as the large-scale companies showed capability to replace their taxis in a short period of time, the Shenzhen government moved the policy requirement for full replacement from 2020 to by the end of 2018. Small-scale companies, on the other hand, struggled with the budget to purchase new EVs and suffered the low market price of the used gasoline cars. A company named Yachi operating 524 taxis reported no obvious changes of its income after replacement, but had to take bank loans to pay deposit money for gasoline cars during the process. Also, small-scale taxi companies are facing more difficulties dealing with drivers who are unwilling to switch to EVs, because they generally have a smaller management team and higher mobility of drivers it hires. 1.2.3 Vehicle manufacturing company (BYD Auto) As the only contractor responsible for every electrical taxi running in Shenzhen from manufacturing to maintenance, the policy-supported monopoly has hugely benefited BYD Auto. The company has signed contracts with the taxi companies to change every battery which deteriorates to lower than 200 km per charge. As EVs in Shenzhen currently require more frequent maintenance and special spare parts which only BYD can produce, the company will continue to benefit hugely from the situation at least for the following few years. 1.2.4 Charging companies Charging companies provide the infrastructure of taxi electrification, therefore are highly influential during the policy implementation process. The marketization of EV charging stations began in around 2016, but private companies only started to break even and make a profit in around 2019 due to the increasing number of EVs. They invest in property rent, construction, and management of the charging site and recover their investments through a service fee which is counted per kWh electricity of the charge. This is also an industry heavily subsidized by the Shenzhen government, with rigid control of the largest fee which can be charged. As property related fee is the largest component of charging station costs,

14 government providing sites for construction is the most powerful encouragement for charging companies to enter the market. According to a company named Car Energy Net, the charging supply for taxi and private Electric Vehicles is now approaching saturation. In the future, charging companies would mostly impact taxi companies and drivers by investing in research and development activities to shorten charging time, and providing rest area services beside their charging stations. 1.2.5 Taxi drivers Taxi drivers in Shenzhen are a diversified group with hugely different opinions about taxi electrification, but has relatively weak influence on this matter. We interviewed 16 taxi drivers during the field trip. Shenzhen is a city of immigrants, so most of the taxi drivers are not local people, but people from other areas who try to earn more money. Drivers opposing EVs are mostly concerned about the waste of time charging their vehicles and limitations of long-distance drives leading to less income; while others are satisfied with less rental fee, less deposit money and less charging fees compared to oil expenses for gasoline cars. Several drivers reported difficulties to use multiple charging apps on their phone as there is not a united platform for all charging stations in the city. At the beginning of this EV revolution, drivers wasted plenty of time lining up for a charging spot as the infrastructure was not sufficient, but now almost no drivers reported long waiting time due to more charging stations built and the efficient driver-oriented communication groups in WeChat. However, as all drivers are using the same model (BYD E6) no matter which taxi company they work for, their complaints about this are highly identical. Problems drivers mentioned include safety hazards caused by heavy weight, delayed braking and A-pillar blind spot, also a fast deterioration rate of the battery. Below is a comparison of typical taxi drivers’ daily income before and after electrification. Typically, a taxi is driven by 2 drivers everyday (2 shifts), we used data we got from 16 drivers and the data we got from taxi companies. Data from drivers varied dramatically but we tried to draw a brief graph of the change of their income. The following chart shows the results of significance from interviewing drivers (1 represents very dissatisfied, 2 represents somehow dissatisfied, 3 represents moderate, 4 represents somehow satisfied, 5 represents very satisfied).

Table 4 Income Analysis for Taxi Drivers in Shenzhen

Figure 7 Major Concerns for Electric Taxi Drivers in Shenzhen

1.3 Experience summary

Figure 8 Implementation Stages of Taxi Electrification in Shenzhen

1.3.1 Strong initiator for the promotion of the policy implementation BYD and Shenzhen municipal government are powerful initiators in this policy. According to many interviewees, one important reason for the success of taxi electrification in Shenzhen is that BYD, an electric vehicle maker, can benefit extremely from this policy. This policy is likely to make it the largest EV maker in China, and can help it gain more market power. For the Shenzhen municipal government, electrifying all taxis is a great governmental achievement and will be regarded as a beautiful answer to President Xi's call on green development. Besides, Shenzhen is a city with huge governmental income which can afford the high cost of subsidies and with BYD in its prefecture, the cost of the policy will be relatively low. For the Shenzhen government, the benefit for setting a model for green transportation, having a powerful EV manufacturing company, weighs more than the cost of subsidy. The initiator should also be strong in promoting the project. For such a huge project, the initiator must analyze the needs of different stakeholders and incentivize them to accept the project. In Shenzhen, the government carried this role out enthusiastically. However, we think there are chances that other companies can act as the promoter instead of governments. For example, if a big company or companies alliance, consisting of players in EV manufacturing, charging stations, taxi companies or even electricity generators, can work together and act on replacing taxis with EVs, they will benefit from this project for this project can actually lower their cost. 1.3.2 Development stakeholders for the pilot period As a new policy, no one ever knows if it will succeed. Therefore, it is important for initiators to find implementing agencies and carry out pilot projects. It helps project promoters try out different solutions and find the best one to scale it. People need trial to see if a method is possible and stakeholders need trials to learn how to solve the problems incurred by the project. The agencies carrying out trials can be given enough power and resources to carry out the policy. This will make everyone see that such a project might work. In the case of Shenzhen, Pengcheng Company is the agency. It is a newly established public owned company which is 100% controlled by the government and its parent company Shenzhen Bus Group has

17 experience in running electric buses and own charging stations. Pengcheng works differently from traditional companies; it is given free licenses; it has free access to charging stations and electricity. In conclusion, it is important to find appropriate trial agencies and each agency should try its best to get resources and carry out a trial project. 1.3.3 Benefits of every stakeholder should be taken into consideration Stakeholders will cooperate with the project if they have incentives to do so. In the case of Shenzhen, taxi companies earn more or the same, taxi drivers can earn about the same amount of income, charging station companies and EV manufacturing companies expanded their market size, (BYD, especially, get monopoly in Shenzhen’s taxi market), customers enjoy lower prices and better service. In conclusion, it is almost a Pareto Improvement. Some may say this policy is successful because Chinese government has absolute power. However, this is not the truth. The key reason for the success is that Shenzhen Municipal Government uses comprehensive methods to adjust the benefit of every stakeholder and give them offers that they would prefer to accept after considering the cost and benefit.

2. Taiyuan Case Taiyuan, Shanxi is another city in China whose taxi fleets have been 100% electrified. Although our team don’t conduct field trip in Taiyuan, we get the following information from another research team in Renmin University16.

2.1 Why Taiyuan electrifies its taxi fleets so fast? From February to April 2016, Taiyuan converted all of its 8,292 taxis into electric vehicles. The vehicle type is BYD e6, which is the same as Shenzhen. However, different from Shenzhen’s three promotion phases on taxi electrification, Taiyuan electrified its taxi fleets in a shorter period of time. The reason behind such fast action is that Taiyuan renewed its taxis in the end of 2007 and the beginning of 2008. According to the retirement rules in China, the maximum running period of a taxi is 8 years. Therefore, 2016 is just a time for Taiyuan to renew its taxi fleets again.

2.2 Subsidies on Purchasing Vehicles Similar to Shenzhen, the Taiyuan government also provides subsidies for electric taxis. But there is no subsidy for taxi drivers, which is different from the situation in Shenzhen. In addition, BYD also provides one complimentary replace of battery for one vehicle. With the subsidies, taxi companies’ purchase cost of electric taxis is lower than market price. Take BYD e6 as an example, its original market price is 309.8K RMB. With 100K RMB Municipal government subsidy, 50K RMB Provincial government subsidy, and 50K RMB Central government subsidy, the price for companies to purchase a BYD e6 is only 109.8K RMB, which has largely reduced taxi companies burden on taxi replacement.

2.3 Charging stations

National-owned charging stations began to run at the same time with the conversion and after that private- owned charging stations began to burgeon. Now, there is even a discount on charging price in private owned stations due to the abundant amount: there are now around 120 charging stations in Taiyuan, which can satisfy drivers’ charging needs.

2.4 Drivers' attitude For drivers, they are mostly concerned about the charging time because this leads to less running time and less income. However, they are satisfied with the service and price of charging. The average satisfaction score is 54 (on 100 scale)17. This result is derived from a survey on 10 drivers conducted in January, 2020.

3. London Case 3.1 Background 3.1.1 ULEV: Ultra Low Emission Vehicle The UK Government is committed to achieve by 2050 almost every car and van in the UK will be an ultra low emission vehicle (ULEV)18. In order to support the early market for electric and other ultra low emission vehicles (ULEV), the UK government formed the Office for Low Emission Vehicles (OLEV) in 2009, a cross government, industry endorsed, team combining policy and funding streams to simplify policy development and delivery for ULEVs. 3.1.2 Mayor’s Taxi and Private Hire Plan London is at the forefront of the zero-emission revolution with more than 20,000 electric vehicles, 1700 electric taxis and Europe’s largest electric bus fleet. In 2016, Transport for London (TfL), part of the Greater London Authority family of organizations led by Mayor of London Sadiq Khan, published the Mayor’s Taxi and Private Hire Plan. It set the goal that London is going to deliver the greenest taxi fleet in the world. 3.1.3 London’s Taxi Industry London’s taxis have a long history and they provide a reliable service to Londoners, tourists and business people from home and abroad. Today, companies such as Hailo and Gett have been at the forefront of an app revolution, as smartphones have transformed how many of us organize the way we travel. Crucially, all taxis are fully accessible for wheelchair users. Currently, there are around 20,100 licensed taxis in London. TfL is responsible for licensing vehicles. There is a 15-year age limit for taxi vehicles. The taxi industry is preparing to play a vital role in the future of a greener, cleaner Capital city, and will have a key part in tackling London’s toxic air. A number of taxi manufacturers are working on the next

19 Office for Low Emission Vehicles, “Driving the Future Today: A strategy for ultra low emission vehicles in the UK”, September, 2013, https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/239317/ultra-low- emission-vehicle-strategy.pdf

19 generation of vehicles offering significant environmental benefits and an improved travelling experience for customers.19

3.2 London’s Pathway to Taxi Electrification 3.2.1 Ultra Low Emission Zone Since April 2019, London has started to run an Ultra Low Emission Zone, or ULEZ in Central London. The ULEZ operates 24-hours a day, seven days a week. Vehicles which do not meet the ULEZ’s emissions standards are required to pay a daily charge to drive in the zone. Currently, taxis with a London license are exempt from the charge, although there is a 15-year age limit for the vehicles. However, with TfL raising standards for newly licensed taxis since 2018, we are still monitoring how the ULEZ policy will change towards taxis. ULEZ has already reduced emissions of nitrogen oxides (NOx) by approximately 29% since it was introduced. Figure 9 Ultra Low Emission Zone in London

3.2.2 Taxi delicensing TfL has restructured and enhanced the taxi delicensing scheme, with £42m available for taxi drivers who delicense their vehicles. If owners have a diesel taxi that is less than 14 years old, they may be able to

20 Transport for London, “Taxi and Private Hire Action Plan 2016”, http://content.tfl.gov.uk/taxi-and-private-hire-action-plan- 2016.pdf

20 surrender their taxi vehicle licenses and plates in exchange for a payment from TfL20. This way can help accelerate the replacement of traditional diesel taxis. Table 5 Eligible vehicle categories for delicensing

3.2.3 Zero Emission Capable (ZEC) taxis requirements On 1 January 2018, the London government introduced licensing requirements to reduce emissions from the taxi fleet by phasing out diesel taxis and increasing the number of ZEC vehicles in London. The maximum 15 year age limit remains in place. The new requirements include: a. Since 1 January 2018, taxis presented for licensing for the first time have needed to be ZEC. This means having CO2 emissions of no more than 50g/km and a minimum 30 mile zero emission range b. First-time taxi vehicle licenses are no longer granted to diesel taxis. ZEC taxis with petrol engines need to meet the latest emissions standard (currently Euro 6).

Currently, there are two models that meet the ZEC taxi emissions standard: LEVC’s (London EV Company) TX model, a plug-in hybrid EV taxi developed by Geely, and Nissan’s NV 200 model, a BEV taxi model. The introduction of the new requirements means that newly-licensed taxi models in London will be either TX model of Nissan NV 200.

To help drivers get a ZEC, the London government funded a government-led plug-in vehicle grant, which will give taxi drivers up to £7,500 off the price of a new ZEC taxi.

3.2.4 Infrastructure a) Charging the ZEC vehicle at home

Taxi drivers can charge ZEC vehicles at home overnight. There are government grants available for drivers to install charging infrastructure at home. For those who do not have off-street parking, the local authority may be able to install charge points near the drivers.

20 Transport for London, Taxi Delicensing, https://tfl.gov.uk/info-for/taxis-and-private-hire/taxi-delicensing-scheme.

b) Charging during working hours

In order to make it more convenient for taxi drivers to charge their ZEC vehicles at public charging points, the London government is working to deliver 300 new rapid charge points by the end of 2020, and a significant number of which will be dedicated for taxi use only. Currently, there are over 200 charge points that have already been installed. At Zap Map, drivers can filter for "taxi-only" charging points and can see whether a particular charging point is currently available or occupied. The government also built 10 Q-Parks in London, which are parking lots with rapid charge points. Drivers having a ZEC taxi can get free access to the rapid charge points in the 10 Q-Park car parks. They can stay for up to an hour to charge their vehicles with an entry fee of £2. Taxi drivers can claim back the £2 entrance fee by submitting a claim form to TfL and get reimbursement. However, all costs payable to charging will be covered by the drivers themselves and additional parking fees besides the maximum 1- hour charging will not be paid by the government. To claim back the £2 entrance fee, taxi drivers must collect and retain a receipt every time they exit the Q-Parks as receipts will be required to support their submission for a reimbursement claim to TfL.

3.2.5 Subsidies The Office of Low Emission Vehicles (OLEV) offers a range of grants and assistance to help drivers make the switch to electric vehicles.

a) Plug-in electric car grant

Because most electric vehicles are brand new, their price can seem higher than comparable petrol or diesel cars at first glance. To help overcome this, the government introduced a special plug in electric car grant to help buyers offset some of the cost of a new electric car.

This grant is available on a range of eligible electric vehicles including cars, vans, motorcycles, mopeds, taxis and even large trucks. To qualify for the plug-in electric car grant the EV that you buy must have emissions of less than 50g/km and a zero emissions range of more than 70 miles. The maximum grant available for new electric cars is £3,500 while the maximum for a new electric van is £8,000. The subsidy for EV taxis currently is £7,500.

b) Electric vehicle charging scheme grant

There are additional OLEV grants available to help cover the cost of electric vehicle charging infrastructure.

OLEV provides grant funding of up to 75% towards the cost of installing a domestic charging station at home. The benefits of this are huge as drivers will be able to charge EVs overnight for a fraction of the cost of filling up a conventional car with petrol or diesel. The electric vehicle charging scheme grant provides up to £500 towards the installation of a home charging station.

IV. Identified Problems 1. Charging Infrastructure 1.1 Rate design ConEd now offers some options for EV owners as an incentive for owning EVs. Owners have the choice to choose using traditional metering method but this leads to high electric expense. Or, they can choose one of the two incentive methods: the first one is to adopt the Time-of-Use method and ConEd will calculate and compare the yearly expense with traditional use for the first year and charge the less one. The second choice is set-up a separate meter for EV. ToU price is as below. This is the price for delivery, a separate supply fee will also be charged. The supply price is market-based and is shown below.21

Table 6 Time-of-Use periods and rates & Standard Residential Rate

21 ConEdison, "Electric Vehicle Rate", https://www.coned.com/en/our-energy-future/technology-innovation/electric- vehicles/electric-vehicles-and-your-bill; Market Supply Charge Calculator, https://apps.coned.com/CEMyAccount/csol/MSCcc.aspx.

Table 7 Market Supply Charge Calculator

1.2 Infrastructure Although the Mayor’s Office of Sustainability (MOS) and Department of Transportation (DOT) have the plan to build 7 DC fast charging stations in five boroughs across NYC by the end of 2020, the reality is quite unsatisfying. According to the interview, only 2 of the 7 started construction in 2019, and the construction of the remaining 5 stations may be postponed for lack of money and COVID-19. Having enough fast charging stations is the prerequisite for promoting electric taxis in NYC and to meet the drivers’ charging needs. 1.3 Technology Standards There are mainly five different charging connectors in NYC now. Although the level 2 chargers will come with a standard SAE J1772 connector that is compatible with most EVs, the connectors for DC fast charging stations are not unified. We think it would be better if the potential electric taxi companies can cooperate with charging infrastructure suppliers and unify a type of connector for electric taxis. In this way, taxi drivers can charge their vehicles more conveniently and quickly.

Table 8 EV charging types

1.4 Charging time Ideally, it takes around 30 minutes to charge an EV taxi with a DC fast charger. However, according to the experience of the Shenzhen case, because of the depreciation of the battery and the variance of performance across different EV models, taxi drivers normally spend 40 minutes to 2 hours to charge their taxis per shift. The charging time is much longer compared to the time a driver devotes to fueling. According to a TLC study on the fueling habits of taxi drivers, drivers spend about 6.25 minutes on fueling each shift. As many taxis in New York City are still double-shifted, longer charging time may not be efficient from drivers’ perspective and will not be easily accepted.

Another problem with the charging time is that it might lead to clustering at chargers. For most of the double-shifted taxis, shift change occurs in a tight timeframe, and drivers would want to avoid passenger peak hours to make more money. Therefore, a large number of shift changes usually occur at a specific time of a day. The cluster of shift changes may cause clusters at chargers. 1.5 Land A Level III charger is essential for a taxicab to operate in the city. However, in places like Manhattan, it is complicated to provide land to build enough charging infrastructure. It will be a huge cost for infrastructure companies to purchase or rent the land.

2. Drivers' Willingness Drivers are one of the most important stakeholders in this process of switching from oil-powered taxis to Electrical ones. Three main elements drivers care about the most are: convenience, profitability, and stability. Potential negative influences reside in all these elements if change in the industry are not guided with careful policies and regulations, and could result in strong resistance from the drivers’ community. New York City taxi drivers are already under huge pressure from decreasing income influenced by a growing number of app-based taxis, longer shifts and relatively low capacity utilization rate (for

25 traditional taxi drivers)22. Therefore, we find it extremely important to design a moral and inclusive pilot project for drivers to fulfill their demands and reply to their possible concerns. We identify the following three problems to be the major potential concerns for drivers in the early process of electrification: charging availability, income changes and adapting to EV models.

2.1 Charging availability Charging availability is recognized as the most important concern based on our case study in Shenzhen. Due to the improvement of battery technology, the capacity of batteries is relieved but as we discussed above, charging technology is still in lack. It is hard to find a cheap and fast way to charge the long-range batteries. Using Level-2 chargers, it will take about 8 hours to charge a 200 miles range battery. Using a DC fast charger, it will use only 30 minutes but will cost more than $15 for a single charge. For an electric taxi driver, there will be two choices: charging at day time working hours using DCFC or charging at night time using a home-installed level-2 charger. For the first choice, drivers would have to waste some of their working hours and drive longer shifts to obtain the same income, and there’s still a very limited number of DC charging stations in the city which might result in long lines waiting for a spot available. For the second choice, large amount of investments will be needed to install level-2 chargers at or near to drivers’ homes.

2.2 Income changes

Income is definitely of concern to drivers. Apart from the charging issue discussed, limited range might constrain the range of service and diminish driver's income. If a driver is running on a low battery capacity, they have to give up long distance trip such as the ones travelling to Airport. However, good news is that a fast charging station in the airport is on the plan of NYPA's EVolve NY. Take 2019 December for example, for yellow taxis, there were about 6 million trips. Among the 6 million trips, there were 8018 trips longer than 27 miles. Among the 8018 trips, there were merely 2125 trips that were not starting or ending at an airport. That's to say, though 99.97% of trips are safe with EVs, there are some services provided now that cannot be fulfilled by EVs.

2.3 Adapting to EV models

Driving habits of a driver are subject to different vehicle models. According to Shenzhen’s experience, getting accustomed to driving EVs requires effort. Although the majority of drivers in Shenzhen has reported a rather short breaking-in period as basic driving techniques of an EV are similar to a gasoline vehicle, there are still certain characteristics of the car model causing them troubles. BYD e6, the universal EV used for all taxis in Shenzhen, are heavier than average gasoline vehicles and accelerate faster, which could require additional training to avoid potential safety hazards. If similar problems exist for EV models used in NYC, drivers might need extra support helping them to handle this change.

Another factor is the change of drivers’ time arrangements. At present, a full fast charging process would take a driver 0.5-2 hours. Compared to a gas refills only taking a few minutes, drivers would need

26 accessory services to eat, rest or complete other activities if they need or choose to charge within working hours.

3. Profit Analysis

We separate profit analysis into two parts: the change of income and the change of cost.

3.1 Farebox Income

We can use the following equation to evaluate drivers' farebox income:

Working hours is the time a driver uses to drive, seek for customers and provide service. Hourly driving distance is the distance a driver will drive per hour. Working efficiency is calculated by dividing effective hour (hours with a customer on board) by total driving hour. Price of service is the price paid on taxi service.

For our analysis, working hours will be affected by electrification since electrification might potentially decreases the time a driver can spend on working. Working efficiency is subject to the density of people, the number of Uber and Lyft, the matching technology, and the driving patterns. Cramer and Krueger (2016) found the number was 49.5% for New York23. Hourly driving distance and price of service will be regarded as constants. Therefore, electrification will affect farebox income only by affecting working hours.

Such analysis requires considering one-shift driver and two-shifts drivers separately: if a driver drives on one-shift, have charging poles at home, the income will not be constrained by electrification because the driver can fully charge the vehicle at night time and cover the distance of the daytime. However, if the driver drives at 2 shifts or have no charging poles at home or have no private storage for the vehicle, the electrification will damage the income to the extent charging might cost. We used TLC monthly drivers' data to estimate the percentage of one-shift drivers. From the result, one shift percentages of green taxis are generally above 90%, while for yellow taxis, they rise from 10% to about 50%. Therefore, now many drivers drive in 2-shifts mode and a vehicle can likely run about 16 hours on road.

23 The American Economic Review, Vol. 106, No. 5, PAPERS AND PROCEEDINGS OF THE One Hundred Twenty-Eighth Annual Meeting OF THE AMERICAN ECONOMIC ASSOCIATION (MAY 2016), pp. 177-182

Figure 10 Estimated One-shift Percentage

Also, using TLC data, we can get the average trips per day per vehicle. Clearly, the average trips per day is declining, together with a drop in farebox income shown in TLC data hub, which might be a result of Uber and Lyft and indicate the pressure on traditional taxi industry.

Figure 11 Trips per Vehicle per Day

3.2 Cost and investment

This model analysis the profit situation of a single taxi. Running an electric taxi requires capital investment for vehicle, charging service, a driver, medallion, and other subsidiary service. The source or the root of income is farebox income, which is distributed to driver (wage), investor (car rental), medallion owner (medallion rental) and others. The rest of the farebox income will be the profit (or loss) of the vehicle. This might be distributed to either driver, company or investor depends on the situation. For example, a taxi may work in this way: the driver drives the taxi, pay rental for medallion, pay rental for the vehicle and kept whatever is left behind. Then, the income of the driver ("the whatever left behind") would be wage plus profit. In other words, we consider a vehicle as accountants consider a company.

Figure 12 Cost & Investment Structure of operating EV taxis

Figure 13 Cashflow Waterfall of operating EV taxis

3.3 Numerical Analysis

Based on the analysis and model setting above, we tried to figure out the exact profit change of taxi electrification. Together with the assumption of working hours, charging hour and driving pattern, we got an estimation as below.

We first analysis the change of fuel expenses and found that due to the low price of mid-night charging, EV-one shift is enjoying a low energy price compared with ICE vehicles. However, for two-shifts drivers, since they have to refill at level-2 or DCFC charging station, the fuel price is higher. According to the "make-ready program" report, the designed DCFC charging price, $0.4/kWh is comparable to the oil price of 3.2/gallon. However, this depends on the assumption that one shift drivers will always charge their vehicles at night time, which might not be always true and might increase the overall energy expenses.

We also get the average driving speed of yellow taxis using the data of 2019 December, which is 14.7 miles/hour. Multiplied this with 8 hours shift, we can assume the average driving distance per shift per day is 117.6 miles. Therefore, a 2-shifts taxi would likely drive 220 miles a day, which is within the range of normal EV battery capacity. However, we should keep in mind this is the result without considering the extreme situation where the drivers go to or from airports or drives at fast speed. Besides, trips at day-time or night time may also vary significantly.

Then, we analysis the total cost of EVs and ICEs for one-shift and include some cases that we find possible to happen in the future. We found that wages are the most important single cost factor followed by energy cost. Because of the high price of EVs compared with ICEs, and low charging price, current EVs are more profitable compared with ICEs.

Besides, we anticipate the EV price will goes down and Green Bank might be happy to offer some cut off on the financing of EVs, which might bring about better economic outcome for EVs. We set EV price to $35k and financial cost to 3% separately and combine them together. Results from such analysis showed that lower purchase price will make EVs significantly profitable compared with ICEs.

However, readers should keep in mind this model is subject to many factors and might not reflect the real situation properly.

Table 9 Comparison of EV & ICE on annual costs

EV 1 shift 2 shifts ICE 1 shift 2 shifts Charging at home Fueling Range miles 117.6 220.5 Range miles 117.6 235.2 x kWh/mile 0.29 0.29 x 1/mpg 0.04 0.04 Efficiency Efficiency x $/kWh 0.02 0.40 x Fuel $/gallon 2.02 2.02 Electricity price price =Daily $/day 0.52 25.20 =Daily $/day 8.50 16.99 energy energy fee fee Annual $/year 190.09 9198.00 Annual $/year 3101.26 6202.52 energy energy fee fee

Table 10 Analysis of annual profit for EV & ICE taxis

EV-base ICE-base Case case case Senstivity-1 Senstivity-2 Senstivity-3 Financing Lower with Green Comprehen Description vehicle price Bank sive Farebox income (annual) Working hours hours 8 8 8 8 8 x Hourly driving distance miles/h 14.7 14.7 14.7 14.7 14.7 x Working efficiency % 49.5% 49.5% 49.5% 49.5% 49.5% x Price of service $/miles 3.9 3.9 3.9 3.9 3.9 =Farebox income (daily) $/day 227 227 227 227 227 x days in year 365 365 365 365 365 =Farebox income $/year 82865 82865 82865 82865 82865 Cost and depreciation Vehicle Purchase cost $ 40000 25000 35000 40000 35000 /Life time year 7 7 7 7 7 =Car rental $/year 5714 3571 5000 5714 5000 Car rental financing fee (WACC) % 6% 6% 6% 3% 3% Total car rental $/year 6057 3786 5300 5886 5150

Medallion Medallion cost $ 150000 150000 150000 150000 150000 /Medallion life time year 20 20 20 20 20 =Medallion rental $/year 7500 7500 7500 7500 7500 Driver wage Working hours hours 8 8 8 8 8 +Charging hours hours 0 0 0 0 0 =Total working hours hours 8 8 8 8 8 x Hourly wages $/hour 16 16 16 16 16 =Annual wage $/year 46720 46720 46720 46720 46720 Energy fee (detail see below) $/year 190 3101 190 190 190 Total cost and depreciation $/year 60467 61107 59710 60296 59560 Annual Profit $/year 22398 21758 23155 22569 23305 Oil price: https://www.nyserda.ny.gov/Researchers-and-Policymakers/Energy-Prices/Motor- Gasoline/Weekly-Average-Motor-Gasoline-Prices Medallion price: https://nycitycab.com/Business/TaxiMedallionList.aspx; https://citylimits.org/2019/11/30/need-to-know-taxi-medallions-in-new-york/. Electricity price: https://www.utilitydive.com/news/coned-developing-13m-curbside-ev-charging-program- with-addenergie/572302/; Off peak 0.0155/kWh

Figure 14 Sensitivity Analysis

V. Recommended Solution 1. The pilot program With more than 130,000 vehicles running on the road, the New York City taxi fleet can not be electrified overnight. Based on our case study in Shenzhen, initiating a pilot program would be helpful to build up foundation for large scale implementation, especially during the early stage of electrification. Following the problems we identified in the section below, the pilot program will mainly serve the following three purposes: 1.1 Testing & refining the economics Taxis going electric are expensive in multiple aspects. The pilot program shall support both charging infrastructure and vehicle purchases by securing funding sources. For charging station investors, upfront installation costs can be a main barrier as it takes a rather long period to recover their investments, if they could at all. By responding to the charging demand of newly added electric taxis, the pilot program can provide investors with more information to analyze profitability of the charging stations based on locations, scale, and plug types. For taxi companies and individuals who purchase EV for taxi usage, the pilot provides an opportunity for them to make the investments with minimized risks, while providing reference for future policy initiatives. The pilot period will also allow commercial EV driving to develop the learning curve and gradually perform lower costs. 1.2 Drawing in main stakeholders Initiating changes in a capital-intensive industry needs early participants. The pilot period in Shenzhen took about 8 years, from the establishment of the first EV company in 2010 to the entire industry switching to electric vehicles in 2018-2019. To have a successful pilot, regulators must work together with charging companies, local utility, taxi companies and manufacturers. The pilot program in NYC could be divided into 3-4 periods (each last 2 years), allowing the decision-making process to modify the supporting mechanisms and propose for new solutions at the beginning of each period. Participating in the pilot could provide main stakeholders with huge potential benefits, thus stimulating them to cooperate. For EV manufacturers, the car model used in the pilot will be likely to dominate the new market for electric taxis in New York. 1.3 Increasing drivers’ willingness to participate At present, switching to electric vehicles is not the prime choice to many taxi drivers. With a small group of volunteer taxi drivers, the pilot program should set up an effective communication method responding to their major concerns. Methods to increase drivers’ willingness of participation would include securing charging access, negotiating electricity discounts, compensating potential income reductions, providing supportive training/courses, etc. 2. Ancillary policies 2.1 Giving Parking Discounts for Electric Taxis During our field trip to Shenzhen, we found that EV drivers can park their cars for free for the first hour across the city and enjoy a parking cost discount after one hour. We found that in NYC, there is a

Carshare Parking Pilot program launched in 2018 led by DOT. We are enlightened by this idea and suggest setting certain pilot parking areas for EVs or electric taxis and give the drivers parking fee discounts so that we can encourage people to use EV.

2.2 Premium on Congestion fee In 2019, Governor Cuomo and Mayor Bill de Blasio agreed to implement congestion pricing in order to solve the city's ongoing transit crisis. As a result, New York City would be the first city in the US to impose congestion pricing and charge drivers entering the heart of Manhattan beginning in 2021, which locates from 60th Street south to the Battery. It is proposed that car drivers could be charged between $11 to $14, while truck drivers could be charged about $25 depending on different hours. To make electric taxis more attractive, we can also provide a certain premium or discounts on congestion fee for electric taxi drivers.

2.3 Make Stricter Fuel Efficiency Rules for Internal Combustion Engine Vehicles Despite the fact that the Trump Administration has relaxed auto fuel efficiency rules recently, we should make stricter fuel efficiency rules to traditional internal combustion engine vehicles. In this way, we are likely to improve the attractiveness of electric taxis.

2.4 Require New Uber and Lyft to Be Electric Ones According to TLC’s fact book, by 2019, there are 116,449 for-hire vehicles in NYC, among which 91% are vehicles like Uber, Lyft, and Via24. The large number of for-hire vehicles has cannibalized the taxi businesses. To encourage the development of the electric taxi market, we’d better make stricter market entry rules for for-hire vehicles. For instance, we can require the new entering for-hire vehicles to be electric ones.

3. Infrastructure The previous pilot program conducted by TLC showed that the participant who was an owner-driver and had his own charger at home was very satisfied with the EV taxi, as he did not have to worry about the lack of charging time and infrastructure. The experience from this pilot program and Shenzhen’s case tells us that it is essential to build out enough infrastructure to serve the taxi fleet in order to achieve electrification of taxis.

Considering that many taxis in New York City are double-shifted, making sure drivers have access to charging during and between shifts would be a key condition for them to switch to EV taxis. Therefore, we think it important to have appropriate infrastructure planning to adjust to drivers’ driving habits,

24 New York City Taxi & Limousine Commission, “2018 Fact Book,” February 14, 2019, https://www1.nyc.gov/assets/tlc/downloads/pdf/2018_tlc_factbook.pdf.

34 making it convenient for both owner-drivers and double-shifted drivers to charge. Based on these considerations, we have following suggestions: 3.1 Focus on building a network of charging stations, parking lots and taxi garages with fast chargers Since most of the taxis in New York City are double-shifted and operate 24*7, it is critical to have enough Level III chargers for a taxi to operate. A feasibility analysis study from TLC concluded that in New York, in order for taxi drivers to have access to charging, one fast charging outlet is required per 13 taxis.

The most efficient way to raise the city capability of fast charging would be to build a large network of fast chargers. As far as we know, DOT has been working on building parking lots with fast chargers. We also recommend that the government partner with charging infrastructure companies to build on-street fast charge points. Besides, the garages of taxi fleets are an important place for drivers to conduct activities, encouraging taxi fleets to install fast chargers at their garages would be a good solution. 3.2 Provide support for home charging It is easier for single-shifted owner-drivers to accept and adopt EV taxis considering that their operating pattern can better adjust to the characteristics of electric vehicles. Moreover, charging overnight is efficient and economical for owner-drivers who have the physical conditions to take advantage of the overnight off-peak energy. Therefore, we suggest the government and related organizations to provide support for owner-drivers to install charging points at home or for the local community to install charge points near the drivers. 3.3 Plan charging infrastructure and provide related customer services based on taxi drivers’ shift and trip behaviors While planning charging infrastructures, understanding taxi drivers’ shift and trip behaviors would help us identify and adjust to the demand pattern of taxi drivers. In this way, charging suppliers can better deal with peak demand and make it more convenient for taxi drivers to charge their taxis.

Currently, more than 60% of the taxi drivers take at least a 30-minute break per shift, and use the time to eat, use the bathrooms and have a rest. The break time would be a potential charging opportunity for EV taxi drivers. Therefore, we suggest planning the charging infrastructure based on taxi drivers shift and trip behaviors and build chargers near the break locations of drivers.

Besides, places where chargers are more frequently used are more likely to have infrastructure out of service. We suggest infrastructure suppliers provide customer services based on drivers’ shift behaviors so that taxi drivers can have better charging experience. 4. Financial Support

Our solution is to set up a blended finance fund that can leverage the impact of available public resources to overcome investment barriers and attract more private investment into the market. As a focused financial vehicle with specialized market and financing know-how, a blended fund is able to spark greater public and private clean energy investment by utilizing a range of techniques and

35 approaches to engage market actors and capital providers, bridging market gaps that allow capital to flow at scale. The blended finance fund structure consists mainly of three categories of investors - the public sector, the private sector, and the grant.

4.1 Grant

The grant makes up 20% of the fund. It comes from the government budget and foundation donations. The grant requires no return of the fund. The potential target investors are the New York city government, the New York State government, and the Rockefeller Foundation.

4.2 Public Sector

The public sector makes up 30% of the fund. It comes from dedicated public or non-profit finance entities designed to drive private capital into market gaps. The investors from public sector require little return of the funding and take on most risk in the investment. NY Green Bank is such an investor, which is a State-sponsored, specialized financial entity working with the private sector to increase investments into New York’s clean energy markets. It aims to create a more efficient, reliable and sustainable energy system in New York City. Funding a project like electrifying NYC taxicabs echoes perfectly on their mission of drawing investment into the clean energy capital market.

4.3 Private Sector

The private sector makes up the rest 50% of the fund. With investors from the grant and public sectors taking on higher risk and little return of the total funding, the investors in the greater private sector will be more willing to draw investment in the clean energy capital market and serve for the funding problem of our pilot project. The potential target investors include high-net-worth individuals, institutional investors, and giant new energy vehicle companies such as Tesla.

In conclusion, the blended finance fund will address and alleviate specific gaps and barriers in current clean energy capital markets through making clear risk and 14return matching mechanisms with different categories of investors. The specific fund structure is listed below:

Figure 15 Funding Structure to support EV taxi implementations

VII. Limitations and Further Research 1. Lack first-hand data in NYC field research We plan to conduct field research in NYC from March to April in 2020, which includes face-to-face interviews with 20 taxi drivers, ConEdison, TLC, and other stakeholders. However due to the COVID-19, we have to give up the initial plan. Even though we still had interviews with TLC, DOT, Calstart, NYSERDA through phone calls, the outcome was not very satisfactory due to the signal problems. In addition, failure to conduct interviews with drivers makes it hard to know their status quo and real thoughts on taxi electrification. We can only make a rough cost-benefit analysis for drivers if they adopt electric taxis based on second-hand materials. 2. Different market and political environment between China and U.S. There is no denying that the U.S. and China have very different market environments and political structures. Therefore, if we can have more sufficient time in the future, we would like to view more EV cases in western countries to explore how they electrified their fleets. However, we do believe that each country can learn some aspects on transportation electrification from each other. And our work is such a trial to bridge the gap between countries. 3. Insufficient research in identifying specific investors in NYC We realized at a very early stage that funding might be the key problem for taxi electrification in NYC, but not until we finished our field trip in Shenzhen had we have the concept about how much money would it take to complete such a huge industry transformation. Although our recommended solutions include a financial support design, there’s no guarantee that the investors we mentioned all have 100% interest in investing in the EV taxi industry and such blended fund percentages can be achieved. Future research is still needed to achieve better communication with the investors. VI. Acknowledgement

We would like to thank the generous time and efforts provided by our Director, Professor David Sandalow, Academic Advisor, Professor Travis Bradford and EE&CGEP Manager Elora Ditton, without whose support this report wouldn’t come to existence. We are also very grateful for the Earth Institute funding and the long-time support from SIPA and CGEP. Our appreciation continues to last year practicum participants Lauren Kastner, Michael Woods and Yu Ann Tan, who helped us tremendously by sharing their experience and related connections. We want to thank all people and government institutions, organizations & companies who accepted our interview and provided valuable information, including but not restricting from: New York City’s Department of Transportation, Mayor’s Office of Sustainability and Taxi & Limousine Commission, NYSERDA, Calstart, Transport Committee of Shenzhen Municipality, Shenzhen New Energy Vehicle Association, Geely (Caocao), Shenzhen Taxi Companies (Xihu, Yachi, Shengang), CareEnergynet, etc. We also want to acknowledge the knowledge and effort by Jiawei, LIU; Chenhao, CAI; Miao, MA, Jingyi, YAN in Renmin University of China on the case study in Taiyuan, China.

Appendix: Calculations of Shenzhen investments

Subsidies for Taxi Companies One-time Extra Emission Reduction Reward (164.8 thousand yuan per Extra Emission Reduction Reward Total Amount Year Batch taxi) by Earlier Replacement (Million RMB) Number of Taxis Subsidies Granted Number of Subsidies Granted Verified (Million RMB) Taxis Verified (Million RMB) 1 6,693 1,103.01 - - 1,103.01 2018 2 1,040 171.39 1,204 28.39 199.78 3 779 128.38 - - 128.38 1 603 99.37 - - 99.37 2 5,517 909.20 - - 909.20 2019 3 - - 5,017 108.41 108.41 4 2,344 386.29 - - 386.29 5 153 25.21 3,200 58.99 84.20 Total 17,129 2,822.86 9,421 195.79 3,018.65 Source: Shenzhen Transportation Committee of Shenzhen Municipality

Subsidies for Taxi Drivers Number of EV taxis (Unit) Subsidies per month (yuan) Months in a year Total (Million RMB/year) 21,485 1000 12 257.82 Source: Company Interview

Direct Subsidies for Electric taxis Subsidy Standard (yuan/unit) Number of taxis (unit) Total (Million RMB) National 44,000 21,485 945 Local 22,000 21,485 472.67 Total 66,000 1,418.01 Source: Company Interview

Subsidies for charging stations Year Stations Poles Total Power Total (Million RMB) 2018 - 512 44,921 20.72 2019 95 2,476 216,201 107.91 Total 95 2,988 261,122 128.63 Source: Development and Reform Commission of Shenzhen Municipality

Total government subsidies: 4823.11 Million yuan