The ride-hailing giant slashed driver incentives despite soaring profits, leaving thousands questioning their investments
Levi Spires thought he was making a smart decision. When the 51-year-old Uber driver from Syracuse, New York, damaged his Prius after hitting a deer last year, a $2,000 promotion from Uber convinced him to upgrade to a Tesla. Over 23 months of driving nearly 139,000 miles, he earned around $3,500 in additional electric vehicle bonuses from the company.
Then last week, Uber discontinued the monthly EV bonuses entirely. Combined with declining hourly earnings, the change has Spires reconsidering everything. His goal now is for Uber to no longer be his main profession.
He’s not alone. Thousands of drivers who invested in electric vehicles based on Uber’s incentives are facing a harsh new reality as the San Francisco-based company scales back its climate commitments despite record profits.
A massive carbon footprint grows larger
Uber Technologies Inc. spent years promoting its green ambitions and pushing drivers toward cleaner vehicles. The company pledged to reach 100 percent EVs in London by 2025 and 100 percent in North America and Europe by 2030. Those goals now seem impossibly distant.
The company’s emissions have nearly doubled over the past three years. With 38 million daily trips globally, Uber’s climate footprint now exceeds the entire country of Denmark. Yet instead of ramping up efforts to meet targets, the company is pulling back.
Current data shows only about 40 percent of miles in London are driven in EVs, while Europe sits at approximately 15 percent and North America at just nine percent. Uber officials acknowledge they will likely miss their green targets, though they maintain commitment to the overall goal. Rebecca Tinucci, former global head of electrification and sustainability at Uber who recently became CEO of the company’s freight business, says the company remains proud of its progress overall.
The political shift
After years of advocating for stronger government policies to accelerate EV adoption, Uber made a startling reversal this spring. The company supported President Donald Trump’s controversial legislation that the League of Conservation Voters labeled the most anti-environmental bill of all time. The law slashed clean-energy incentives and is expected to slow EV adoption in the United States by about 40 percent compared to previous projections.
Chief Executive Officer Dara Khosrowshahi even appeared in a White House promotional video for the legislation. Tinucci explains the company was swayed by the law’s no-tax-on-tips provision, which could help drivers take home more money. She acknowledges there are trade-offs the company must make from time to time, though these decisions don’t negate their electrification goals.
The reversal stings particularly hard in states like California, New York and cities like Toronto that enacted rules requiring ride-hailing companies to rapidly electrify their fleets. Uber is now pushing back against California regulators, urging them to delay enforcement because eliminated federal incentives make the targets nearly impossible to meet.
Drivers left holding the bill
Chuck, a 40-year-old driver from Wilmington, Delaware, purchased a Tesla Model Y two years ago after his Honda Accord died. Uber’s EV incentives, which could reach $4,000 annually, made the pricier vehicle seem worthwhile. Now those bonuses have vanished, and he earns little more per ride than he did in his decade-old Honda. He requested his last name not be used for fear of being deactivated by Uber, but describes the change as deeply painful for many drivers who relied on those incentives.
The company previously added an extra dollar per ride for EV drivers in the United States and Canada, potentially totaling several thousand dollars yearly. In London, passenger fees initially set at 15 pence per mile quickly accumulated over $180 million in driver accounts for purchasing electric vehicles. Those rider-funded programs in London and France are now winding down.
The new approach
Uber maintains it hasn’t abandoned its green ambitions, just changed its strategy. Instead of using profits to subsidize the transition, the company wants to leverage environmentally conscious consumers who prefer riding in EVs through its Uber Electric program. The service allows riders in hundreds of cities to request electric vehicles at roughly the same price as standard rides.
Tinucci describes this as creating demand that sends more trips to EV drivers, reducing wait times between rides. She argues tracking financial outlays isn’t the best measure of commitment to electrification.
The company still offers some perks, including negotiated discounts on new cars and charging rates. A recent $4,000 bonus for gas drivers purchasing EVs only applies to limited markets including California, Colorado, Massachusetts and New York City, expiring after 2,500 drivers claim it.
Meanwhile, Uber’s operating profits are set to double this year, and the company recently pledged $20 billion for stock buybacks. One investor described Uber as having become a money-printing machine under Khosrowshahi’s leadership.
Competitor Lyft has also quietly abandoned its pledge to electrify its entire fleet by decade’s end, though representatives say they continue helping EV drivers through bonuses and discounted charging.
Source: Bloomberg News