Electrifying goal: How a cleaner fleet can build business

Lyft has joined a growing list of companies committing to limit their carbon footprint with a pledge to electrify the company’s entire fleet. In June, the ride-hailing company announced its plan to transition to 100 percent electric vehicles (EVs) by 2030. Lyft’s most significant announcement since a 2018 pledge to become carbon neutral builds on that initial goal, taking it many steps further.

Lyft’s latest commitment follows similarly ambitious goals set this year. BP is aiming for net-zero emissions on operations, oil and gas production, and advocating for carbon pricing policies. Microsoft is also targeting a first-of-a-kind negative emission strategy. Other climate leaders are doing the same.

In addition to creating a template for other large fleet owners and managers to follow when they go all electric, Lyft is building value for its brand and products by making its fleet cleaner. It’s staying ahead of potential regulations in the industry and giving itself a potentially big voice in the policies those regulations come from.

The transportation sector is in opportune position to drive reductions because of its current impact on emissions – specifically from ride-share companies. Overall, transportation emissions account for 29 percent of overall U.S. emissions, the nation’s largest emissions source. As for the impacts of ride-sharing, a 2019 California Air Resources Board (CARB) report found the average trip with ride-sharing services creates 50 percent more harmful emissions than the average car trip, due to induced congestion and the frequency of “deadhead miles” (extra miles between rides, when the driver is alone).

Lyft plans to carry out its 100 percent EVs goal through a three-step process:

  • Focus on policies that make EVs more affordable to buyers.
  • Use Express Drive rental program to streamline nearer-term EV access.
  • Build demand among its platform users.

One of the current primary challenges is that EVs have a higher up-front cost than gasoline-powered vehicles, mostly because of the cost of the battery. However, as battery prices drop, the initial cost for EVs will also decline. This is where Lyft’s first step comes in: To make EVs more affordable for its drivers, the company wants to push policies that will accelerate EV sticker price cost-parity, including capital cost incentives, expanded charging infrastructure, and clean vehicle standards. The C2ES report, Getting to Zero: A U.S. Climate Agenda outlines policy recommendations that support EV adoption, including building charging and fueling infrastructure and the implementation of U.S Environmental Protection Agency (EPA) greenhouse gas performance standards.

Currently, Lyft allows drivers to either use their own cars or rent them in 33 cities through a program called Express Drive. The goal is that by 2028, 100 percent of the Express Drive fleet’s miles will be driven by EVs. That’s two years ahead of drivers who use their personal vehicles, but Lyft believes it’s a necessary move.

The final step is to build demand for EVs among all Lyft platform users. This includes drivers, riders, and transportation managers. Lyft’s Green Mode is already driving demand for EVs from riders. Riders can specifically request a hybrid or EV in order to reduce their environmental impact and also show their support for EVs, a unique consumer value. This increased exposure to EV’s offered to consumers can also drive demand for consumers to eventually purchase their own EV. Lyft hopes that its efforts to enable EV policy, electrify its own fleet, and drive demand among consumers will lead to affordable EVs by 2030 for drivers who want them.

The plan sheds light on the importance of not only engaging in policymaking but staying one step ahead of it. Any proactive measures a company can take in anticipation of future policy provides it with a competitive advantage. Lyft’s ambitious target now affords the company a head start in California, where CARB is planning new mandates for the required percentage of electric vehicle miles traveled by California’s ride-share drivers that will go into effect in 2023.

There is also a heightened expectation from both consumers and employees that businesses will work to minimize their emissions, a new status quo that values businesses that prioritize their social and environmental impact. By putting sustainability issues on the short list of top company values, sustainable businesses are attracting both new customers and top talent.

That’s a sound strategy for fostering brand loyalty, key in an industry like ride sharing, where customers often switch brands without much thought because there isn’t much differentiation in their products. Any nuance of favorable consumer perception can be an incremental win for an organization.

Furthermore, companies that participate in policy changes give themselves a head start in the implementation process. This gives them greater control over the methods and speed at which they adapt to changes, thus lowering costs. Lyft already has its framework in motion while its competitors spend time and resources playing catch-up once new EV policies have already been created. This has proved to be successful for companies in the past, notably the chemical company DuPont, when it responded to the phasing out of chlorofluorocarbons (CFCs) under the Montreal Protocol.

Mobility is changing and doing so rapidly. Businesses and lawmakers have a long road ahead to enact policies and take action on climate, but Lyft has certainly made a bold step. We hope this latest commitment inspires other companies within and outside of the transportation sector to make ambitious commitments to emissions reductions and bold climate leadership