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Ride-hailing Roundup: Lyft’s share price is volatile, while Revel electrifies New York

Ride-hailing firms are getting on board with the shift to electric vehicles.

Ambitious government targets for carbon emissions, automobile manufacturers investing in more advanced technology and greater public awareness all mean the likes of Lyft [LYFT] and Uber [UBER] don’t want to get left behind. Lyft has said 100% of its vehicles will be electric by 2030 but, despite the greener credentials, its share price is vulnerable to proposed changes to gig worker rights.

These issues and more all played out at the end of April, following bumper-to-bumper announcements from ride-hailing companies, automobile manufacturers and politicians.

 

Lyft’s share price gained on Toyota deal

Lyft is offloading its self-driving technology arm to Toyota [7203.T] for a cool $550m, in a deal announced on 28 April. The announcement put Lyft’s share price into a higher gear, seeing it close at $63.64 — up 2% on the day.

$550million

Lyft's self-driving technology deal with Toyota

  

Toyota made headlines the day before (27 April) following a pledge to become carbon-neutral by 2050. The Aichi-based automobile giant has been accused of being slow to update the market on its electric vehicle plans. In mid-April, Toyota began to rectify this by announcing the establishment of a full line-up of electrified vehicles, along with a pledge to have 70 electric models on the road by 2025.

 

Lyft’s share price tanks on labour worries

Despite this optimism, any gains made following the Toyota deal were quickly wiped away as Lyft’s share price tanked circa 10% on 29 April. Comments made by President Biden’s Labor Secretary, Marty Walsh, to Reuters were responsible for stalling the share price, with the official suggesting that many gig workers should be reclassified as employees.

 "We are looking at it, but in a lot of cases gig workers should be classified as employees ... in some cases they are treated respectfully, and in some cases they are not, and I think it has to be consistent across the board."

“We are looking at it, but in a lot of cases gig workers should be classified as employees ... in some cases they are treated respectfully, and in some cases they are not, and I think it has to be consistent across the board” - Marty Walsh, President Biden’s Labor Secretary

 

Gig companies including Lyft, Uber and Doordash [DASH] have spent millions resisting legislative efforts to reclassify the people that deliver their products as employees. In November, voters in California voted to reject major gig economy reform. Uber, Lyft and DoorDash’s share prices all surged following the vote, demonstrating how sensitive these stocks are to legislative reform.

Given that the comments came in an interview, it’s unlikely that a change in policy is imminent, however, it's a sign of the direction that the Biden administration is willing to take on worker rights. Walsh also pointed out that, during the pandemic, the Federal government had to foot the bill to cover unemployment benefits, rather than the gig companies.

 

Revel electrifies New York

E-mobility company Revel is taking a different tack on workers’ rights with its new all-electric ride-sharing service in Manhattan. The service will use a fleet of 50 Tesla Model Ys, charge customers similar fees to Lyft and Uber, but crucially it will have hired employees behind the wheel, not gig workers.

“For the same price, you’re able to get into a fully electric vehicle with a company that actually employs New Yorkers and doesn’t push all the insurance risk and asset depreciation onto New York City residents just trying to make a living,” Revel’s CEO, Frank Reig, told TechCrunch.

“For the same price, you’re able to get into a fully electric vehicle with a company that actually employs New Yorkers and doesn’t push all the insurance risk and asset depreciation onto New York City residents just trying to make a living” - Revel’s CEO, Frank Reig

 

Reig describes Revel’s mission to “electrify cities” by providing electric transportation options and the necessary infrastructure. Revel started in 2018 with dockless e-mopeds in NYC, before branching out to other US cities. Manhattanites below 42nd street will be able to access both the new ride-sharing service and e-mopeds from a single app, with mooted expansion to other areas of New York City.

Revel has raised $31.6m in two funding rounds and investors include Ibex Investors and Toyota, according to Crunchbase data.

 

Where next?

Lyft and Uber’s business models were upended in 2020 as the pandemic and regulatory pressures came to bear. Uber was able to rely on its UberEats business to offset some losses, but Lyft missed out on the valuable business travel. Investors may be particularly concerned given that some forecasts suggest this may not return to pre-pandemic levels until the middle of the decade.

However, vaccination rollouts and a reopening of the economy, including the removal of social distancing restrictions, could see ride-hailing companies poised for a sharp recovery through the rest of 2021. Lyft has said that it expects “positive rideshare growth on a year-on-year basis”, while Uber expressed signs of confidence in its latest earnings update.

As people begin to feel more confident getting an Uber or a Lyft, the ride-hailing companies’ share prices could accelerate through the remainder of 2021.

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