Why manufacturers focusing on ride-hailing companies makes sense

When Ford CEO Jim Farley spoke of developing a ride-hailing vehicle early in June, he took aim at the king. “The Prius is not a good vehicle for shared mobility,” he said. Farley, a former Toyota executive himself, acknowledged the hybrid hatchback’s ride-hailing positives, such as good fuel economy and decent resale value. But he also pointed out that it doesn't have enough driver-assistance technology (increasing insurance bills) and it still uses petrol. And most importantly, it isn't bespoke. “The largest fleet of operators today in the US are Lyft and Uber drivers. There are 1.3 million of them, larger than all the rental companies combined. And no one has ever built a product for them,” Farley told the Bernstein Conference. Farley wouldn’t be drawn too much on the product that Ford would launch, but he said that it had to be electric. And it would probably be offered by the company’s commercial vehicle arm, Ford Pro. “I don't want to give too much away, but we're the biggest commercial [vehicle] provider, and that's a commercial vehicle.” Ford isn't alone in this. Across the world, Uber drivers are being targeted as never before by car makers that have done the sums on electric, seen where personal mobility is heading, particularly in cities, and identified that there’s a market for high-use cars primarily being used as ride-hailing taxis. Last month, Group Renault signed a contract with Spanish ride-hailing company Cabify to become the first customer of its Chinese-made Mobilize Limo electric car, which it says has been designed for high-mileage city work. The deal is for 40 Limos, which the mobility division says are good for 300,000km (186,000 miles). In April over in Mexico, mobility company called Vemo signed a deal with China’s BYD for 1000 units of its D1 electric taxi. Resembling the Volkswagen ID 3 but with a single sliding passenger door, the D1 was developed for and with the help of Chinese rail-hailing giant Didi Chuxing. In the UK, meanwhile, electric van and bus start-up Arrival is working on an electric car developed with Uber drivers in mind, promising it for launch next year. Of course, the UK blazed the trail for dedicated taxis with the London black cab, now called the LEVC TX and utilising a plug-in hybrid drivetrain. The ride-hailing market is subtly different, however, in that the cars will often have to double up as the drivers’ own on the weekend. While they don’t differ too much from other cars seen on the street, the business model for the manufacturer is much more tailored. “It will be optimised not for purchase price, because that won't matter if you rent it; it will be optimised for the total ownership cost,” Farley said. That monthly figure will be partly determined by the cost of building the car, so that definitely gets scrutinised as well. For example, the D1 uses the cheaper and more durable LFP (lithium iron phosphate) battery chemistry. Mobilize has adapted the Limo from a vehicle made by Renault partner Jiangling in China and shipped it over. The Chinese connection also helps with roominess: over there, almost every car over a certain length has decent rear-seat room. The car companies have learnt to keep an arm’s length from the nitty gritty of actually running a ride-hailing business. Renault, for example, wants to be “an enabler rather than an operator” and so will lease out the Limo to ride-hailing providers and other mobility businesses. Electric is now a no-brainer for anyone now thinking of entering this market. “If you use the vehicle 70%, 80% of the day, then EV economics are much better,” Farley said. By 2023, any new car registered for private hire in London must be electric, and Uber has pledged to go all electric in the capital by 2025. By 2030, it plans to be entirely electric across the UK. If aiming at primarily ride-hailing and other high-use fleets, manufacturers can focus on the charging side as well. In China, battery-swapping specialist Aulton is targeting taxis for its services, on the basis that they will be in greater need of its facilities. The company, in which BP has invested, initially partnered with Changan for its Eado EV460 model. In the future, a ride-hailing car might be available with wireless charging capability. Work has just started in Nottingham to install wireless charging for a taxi stand, usable by adapted vehicles. The perfect ride-hailing car won’t initially be recognisable as such. But retail concerns such as the source of the vehicle, the brand, the styling and the performance will take a back-seat to the broader concerns of range, charge speeds, driver assistance, digital connectivity and, of course, total cost of ownership. Said Farley: “When we sell for that [total ownership cost], the product and the software experience is totally different than a Prius.”