Ola, Uber and the sustainability challenge of new mobility

Hiring a taxi through a ride-hailing service could emit up to 70% more CO2 than the conventional trips that such services are replacing. This is the takeaway from a new study published by US-based Union of Concerned Scientists (UCS). This indictment of ride-hailing services is the latest in a series of questions that have been raised over the environmental sustainability of the modern economy of convenience.

The first-of-its-kind quantitative comparison carried out by UCS was based on data collected from Boston, Chicago, Los Angeles, New York, San Francisco, Seattle and Washington and found that time spent on waiting or driving towards a pick-up accounted for about 42% of all ride-hailing activity. According to the study, ride-hailing is increasing vehicular travel, pollution, and congestion. Researchers found that, on average, a solo ride-hailing trip emits nearly 50% more carbon dioxide than one in a private vehicle. Compared to a private car trip, a non-pooled ride-hailing trip produces about 47% more carbon emissions. A pooled trip shared by two commuters emit the same as a private vehicle trip, and about 33% less polluting than a non-pooled ride-hailing trip.

The true costs of convenience are only just being revealed and the numbers don’t bode well. Assessments of the environmental costs of online video streaming, e-commerce, fast fashion and fast food have all surfaced over the last few years with damning revelations. The UCS study is yet another reminder of the environmental costs of convenience that could soon become too substantial to ignore or change course. 

The recent findings have significant and peculiar implications for India, where ride-hailing and delivery services have grown rapidly in recent years. In just a decade, India has emerged as one of the largest and fastest growing markets in the world in the ride-hailing segment. Not only has the industry been among the biggest job creators in recent years, revenue has grown to about USD 37 billion with 207 million users with taxi aggregators making massive impressions on the Indian urban mobility landscape. Taxi fleets run by app-based aggregators alone are estimated to constitute about 15% of the country’s passenger vehicle market by 2025 while the ride-hailing market size exceeds USD 55 billion. Add to this the burgeoning numbers of delivery vehicles and India’s likely future tussle with getting associated carbon emissions under control begins to come into view.

Two of the biggest players in the Indian ride-hailing market, Ola and Uber, have been tussling to dominate the market. While Uber just last month claimed to have market majority having registered 14 million rides per week in 2019-20, a 25% growth over the previous year’s figures, Ola beats Uber comfortably on monthly downloads and has consistently registered around 25 million active monthly users- 30-40% higher than Uber. Unsurprisingly, both companies count India among their biggest centres of growth. Which is why the new findings should be a cause for concern to both new mobility giants. Fortunately, though, the UCS study does offer a way out. Adding weight to calls for electrification of taxi fleets that are growing worldwide, the study says that moving towards all-EV fleets of taxis could make ride-hailing the definitively greener option compared to conventional car trips. While buses and trains still emit much lower amounts of carbon, a ride-hailing trip in an EV would cut emissions by about 50% compared to a private vehicle trip whereas a pooled electric ride-hailing trip would lower emissions by nearly 70%.

In India, while the government has announced plans for complete electrification of three-wheelers by 2023, news reports have also suggested that the Centre is mulling mandating cab aggregators to convert 40% of their fleets to electric by 2026. Unsurprisingly, both Ola and Uber have taken note of the rising calls for electrification. In late September last year, Ola announced its “Mission: Electric” to introduce one million EVs or 20% of its fleet by 2022. Uber India, too, responded last month by announcing plans to make EVs a “meaningful part of the overall portfolio” over the next two years. While e-mobility start-ups have also started to spring up, as far as taxis go, adoption is yet to pick up with only a few thousand e-taxis currently plying Indian roads. The reluctance to adopt EVs was evident in the lacklustre response to state-owned Energy Efficiency Services Limited’s (EESL) tender for 10,000 EVs to electrify government employees’ car fleet worsened by stories about their poor performance.

A big factor is the higher investment costs involved in EVs, which still cost around three times as much as conventional cars. Commercial adoption of EVs still hinges heavily on access to charging infrastructure the present state of which translates to unviable opportunity costs. While experts have also argued for progressive incentives, including per km incentives to drivers for faster adoption in light of the higher investment costs involved in EVs, it seems improbable that large-scale adoption of EVs can happen without subsidised purchase costs for private customers and rapid multiplication of intra-city charging stations for commercial operators.

There is little doubt that convenience is here to stay and the costs are likely to keep piling. Unlike with many other fronts of the modern economy though, there is a big opportunity for optimisation and change in urban mobility, especially for countries like India. All that’s needed is political will and competent policy.

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