UPDATED: June 24, 2021: New York City's Taxi and Limousine Commission (TLC) voted 5-1 Tuesday to close a loophole that could have allowed Revel to operate a ride-hailing service using electric vehicles (EVs) in the city.

The loophole in the city's ride-hailing regulations exempted EVs from a cap on licenses for new for-hire vehicles. The cap has existed since 2018 to limit Uber, Lyft and other companies from adding drivers and increasing congestion. Closing that EV loophole means Revel cannot begin its new service.

In testimony, Revel CEO Frank Reig criticized the TLC's "unprecedented resistance" to the company’s plan, which would have seen it launch an initial fleet of 50 electric Tesla Model Ys, driven by employees rather than independent contractors.

"Revel isn't going to flood the streets with thousands of cars at once like other operators have in the past," Reig said. "In fact, we literally can’t do that," he continued, noting the lack of charging infrastructure in the city.

A petition urging the TLC to reverse its decision is already circulating. And in a tweet after the hearing, Reig vowed to fight on.

Building a business is hard. Especially when shortsighted bureaucracy and entrenched interests stand in your way. But you can't stop the future and you definitely can't stop my team. We'll be launching shortly and I can't wait to show New Yorkers the future of rideshare!

— Frank Reig (@FrankReig) June 24, 2021

Dive Brief:

• Revel plans to expand beyond its existing moped service to offer all-electric ride-hailing in New York City by the month's end, but local regulators say the scheme is not licensed and may not go ahead.
• The company intends to launch an initial fleet of 50 electric Tesla Model Ys later this month. Revel will own and operate the fleet, and drivers will be employees rather than independent contractors. The cars will charge at Revel's Superhub charging stations, which will be available for public use as well.
• The launch may not be so straightforward, however. Officials with New York's Taxi and Limousine Commission (TLC), which regulates ride-hailing in the city, said the plan is not licensed. In an interview, Revel CEO Frank Reig said the company is working "hand in hand" with the TLC on licensing, but the TLC said Revel is attempting to skirt rules around vehicle electrification.

Dive Insight:

Reig pledged that the company's new ride-hailing service would be different in a number of ways from Uber and Lyft, which have dominated the space in the United States. Revel has already built a sizable customer base with its other offerings, including its moped-sharing service that returned to New York City last year after suspending service following multiple rider deaths, as well as its subscription-based e-bike service and publicly available Superhubs.

But the TLC said Revel's ride-hailing proposal looks to get around a rule it introduced when New York City became the first to regulate the ride-hailing industry in 2018 and instituted a pause on new for-hire vehicle (FHV) licenses. That pause — an attempt to prevent saturation of the market and help the distressed taxi industry — was extended in March. The moratorium on new FHV licenses includes an exemption for owners of electric vehicles (EVs), and TLC officials said Revel is trying to take advantage of that.

"TLC capped for-hire vehicles because supply already exceeds demand," TLC Commissioner and Chair Aloysee Heredia Jarmoszuk said in an email. "The electric battery exemption exists to encourage already-licensed cars to go green, not to flood an already saturated market or to disenfranchise the Yellow Taxi sector in Manhattan. This ride-share scheme deviates from the spirit of those rules, and TLC will not cut corners in doing its full diligence."

But Reig said that contrary to the TLC's assertion, the company already has a base license with the city and is now into the second stage of the process of registering an initial fleet of vehicles under that license.

"We feel comfortable where we are in that process for us to be launching in the near future," Reig said. "For us, it's just continuing a good line of communication with them, which we have done from day one and over the last few months."

Ride-hailing companies have come under fire in the past for their labor practices and reliance on independent contractors. The UK Supreme Court undermined that practice early this year when it ruled unanimously that drivers must be classified as workers. Revel, which has consistently rejected the use of gig workers for its services, said having employees as drivers means better service for customers and higher standards in areas like safety.

"These are drivers that are going through a day of training, that are getting direct feedback on how they're driving from speeding, acceleration, harsh braking, any sort of metric related to the vehicle that we're able to give directly back to our workforce," Reig said. "That's a certain standard and certain measure of accountability that other companies just don't have with their driver workforce."

Revel has partnered with Tel Aviv-based Autofleet to manage its fleet. With drivers as employees instead of independent contractors, the company can analyze data about trip demand, routing and charging station locations, and it can dispatch drivers where they are needed most. Autofleet CEO Kobi Eisenberg said that that efficiency should mean Revel’s ride-hailing fleet does not add to congestion in New York.

"Overall, it’s increasing mobility in the city without the expense of increased congestion, mainly because you can operate the fleet in a much more efficient way, versus having drivers roaming around the city," Eisenberg said. "Only the vehicles that need to be on the road will be on the road."

Other ride-hailing companies have also pledged to electrify their vehicles and other offerings, with Lyft and Uber separately promising an all-EV fleet by 2030. But Reig said those promises are too far off, and the fight to reduce emissions must be done quicker to mitigate the worst impacts of climate change.

"We are working to electrify cities, and doing it now in 2021," Reig said. "We're not the company that talks about 2030 or 2040."