Effects of Air Emission Externalities on Optimal Ridesourcing Fleet Electrification and Operations

Ridesourcing services from transportation network companies, like Uber and Lyft, serve the fastest growing share of U.S. passenger travel demand.¹ Ridesourcing vehicles' high use intensity is economically attractive for electric vehicles, which typically have lower operating costs and higher capital costs than conventional vehicles. We optimize fleet composition (mix of conventional vehicles (CVs), hybrid electric vehicles (HEVs), and battery electric vehicles (BEVs)) and operations to satisfy demand at minimum cost and compare findings across a wide range of present-day and future scenarios for three cities. In nearly all cases, the optimal fleet includes a mix of technologies, HEVs and BEVs make up the majority of distance traveled, and CVs are used primarily for periods of peak demand (if at all). When life cycle air pollution and greenhouse gas emission externalities are internalized via a Pigovian tax, fleet electrification increases and externalities decrease, suggesting a role for policy. Externality reductions vary from 10% in New York (where externality costs for both gasoline and electricity consumption are relatively high and a Pigovian tax induces a partial shift to BEVs), to 22% in Los Angeles (where high gasoline and low electric grid externalities lead a Pigovian tax to induce a near-complete shift to BEVs).