The return on investment for taxi companies transitioning to electric vehicles

Abstract

We study whether taxi companies can simultaneously save petroleum and money by transitioning to electric vehicles. We propose a process to compute the return on investment (ROI) of transitioning a taxi corporation's fleet to electric vehicles. We use Bayesian data analysis to infer the revenue changes associated with the transition. We do not make any assumptions about the vehicles' mobility patterns; instead, we use a time-series of GPS coordinates of the company's existing petroleum-based vehicles to derive our conclusions.As a case study, we apply our process to a major taxi corporation, Yellow Cab San Francisco (YCSF). Using current prices, we find that transitioning their fleet to battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs) is profitable for the company. Furthermore, given that gasoline prices in San Francisco are only 5.4% higher than the rest of the United States, but electricity prices are 75% higher; taxi companies with similar practices and mobility patterns in other cities are likely to profit more than YCSF by transitioning to EVs.

The optimal design and cost implications of electric vehicle taxi systems

“…Therefore, range limitations are not considered for PHEVs in this paper. This assumption is the same as that made in Carpenter et al (2013). We note that other assumptions could be made for PHEVs in future work, regarding range limitations and recharging behavior.…”

“…While the list of comparisons is not exhaustive, since the models utilize different underlying approaches, it highlights several general differences to provide the reader with greater context, and some introduction to the models of Section 3. The focus is on making comparisons with the simulation approach of Carpenter et al (2013) for electric vehicle taxi systems, along with comparisons with previous network-based approaches. We do not aim to analyze the differences in models in depth, since many of these issues will be context dependent, and many suggest topics for future research.…”

“…Yang and Yang, 2011;Yang et al, 2010a) and also minimization of fleet size (Yang and Wong, 1998) have been objectives of network-based models. On the other hand, the objective of Carpenter et al (2013) is to maximize profit for a taxi company, which is transitioning to using electric taxis. Various objectives are useful, depending on the particular problem being addressed.…”

“…As mentioned in Section 1, previous economic models for taxi systems are available to help set fares, allowing the models of this paper to be combined with the previous work through the approach suggested in Daganzo (2012). On the other hand, Carpenter et al (2013) include fares in the model to determine revenues, and network-based models generally include fares to model taxi behavior (Yang and Yang, 2011). Various approaches can be useful, depending on the particular problem being addressed.…”

“…(iii) In this paper, time and distance variables are calculated by using expected values, according to approximate methods, as mentioned in Section 1. On the other hand, in Carpenter et al (2013) and the network-based approaches of other papers (e.g. Yang and Wong, 1998), taxi activities are accounted for in greater detail.…”