California Orders Uber, Lyft to Transition to EVs by 2030

It is unclear how rideshare drivers will pay for new electric vehicles.

Uber and Lyft sign on a car

Scott Olson / Staff / Getty Images

California environmental regulators have rolled out new emission targets for rideshare companies, including Uber and Lyft, that could fuel EV sales and help the state slash transportation emissions. 

The “Clean Miles Standard” mandate approved by the California Air Resources Board (CARB) last week requires rideshare companies to reach zero greenhouse gas emissions and “ensure” 90% of their vehicle miles are fully electric by 2030. CARB calculates at least 46% of cars in California’s rideshare sector will have to be electric for that to happen.

It’s hard to estimate how many rideshare drivers are there in California because many of them work for both Uber and Lyft, but Lyft had around 300,000 active drivers in 2019—a number that has likely declined due to the pandemic.

The mandate could help California meet its goal of cutting greenhouse gas emissions by 40% by 2030, and will likely lead to less air and noise pollution in the country’s most populous state. 

“The transportation sector is responsible for nearly half of California’s greenhouse gas emissions, the vast majority of which come from light-duty vehicles. This action will help provide certainty to the state’s climate efforts and improve air quality in our most disadvantaged communities,” said CARB Chair Liane M. Randolph. 

Research shows that the fast growth of ride-hailing companies in recent years has led to increased emissions from the transportation sector because people increasingly take an Uber or a Lyft instead of using public transport or biking.

The resolution basically mandates rideshare companies to turn their backs on internal combustion engine vehicles in favor of plug-in electric cars, which is aligned with President Biden’s efforts to put more EVs on America’s roads. But the main caveat is Lyft and Uber are gig economy companies that don’t own any vehicles since they rely on independent contractors who drive cars they either own or lease from others.

CARB said drivers can apply for incentives, including the Clean Vehicle Rebate Project, the Clean Cars 4 All program, and the Clean Fuels Reward. The federal government also offers a tax credit.

On the one hand, EVs are more expensive than combustion engine vehicles, and drivers may need to install home chargers and spend more on car insurance; on the other, drivers will save money on fuel and on repairs because EVs are cheaper to run.

Uber and Lyft reportedly said drivers should cover the costs and they should receive additional subsidies to buy EVs—money that would ultimately come from taxpayers.

The Union of Concerned Scientists (UCS) estimates complying with the mandate will cost $1.7 billion over the next decade.

“I found that it would cost less than 4 cents per mile (or, given average trip length of 12 miles, about 43 cents per trip) for Uber and Lyft to cover increased vehicle costs, home charger installation, and insurance costs, while the average driver would save over $1,000 with a year of driving,” wrote Elizabeth Irvin, a senior transportation analyst at UCS.

Vehicle Miles

CARB’s order focuses on “vehicle miles” and does not set limits on the number of combustion engine cars that rideshare companies can have on their fleets. 

CARB is encouraging rideshare companies to reduce deadhead miles—the distance that drivers travel without passengers in their cars—and promote car-pooling. Progress in these two areas will count toward the “90% electric miles target” set by the organization because it would allow rideshare companies to reduce tailpipe emissions.

This is important because deadhead miles represent nearly 40% of the miles traveled by rideshare cars.

Uber and Lyft have already pledged to switch their entire fleets to EVs by 2030 but CARB’s mandate basically enshrines those commitments into regulation and sets annual targets starting in 2023.

The bottom line is the mandate will help reduce emissions but the pressure is on rideshare companies to cover some of the costs.

“The Clean Miles Standard has the potential to make real positive change, for the environment and for drivers, and hold ride-hailing companies accountable to the commitments they’ve made to go electric,” wrote Irvin.