Abstract:

This paper analyzes the opportunity for government taxes and fees to address ride-hailing fleets’ environmental externalities by steering companies and their drivers to accelerate adoption of electric vehicles. Taxes and fees can be a driving force behind the transition to electric vehicles in ride-hailing fleets and the market overall.  The authors apply a total cost of operation metric for conventional, hybrid, and electric ride-hailing vehicles in cities in the United States and Europe. Based on this, they assess several different types of taxes and fees on ride-hailing vehicle use that could accelerate the electrification of ride-hailing fleets, and the appropriate timing for such programs. This analysis leads to the following three conclusions: (1) Government taxes and fee structures can make electric vehicles the most economically attractive technology for ride-hailing fleets. (2) A well-designed ride-hailing fee program can help overcome the prevailing barrier of charging infrastructure. (3) As ride-hailing fleets transition to electric, taxes and fees will need to be adjusted over time.