For several reasons, including issues related to the struggling yellow cab industry, we don’t believe the TLC will undo the FHV Cap. We expect EVs & WAVs to remain exempt.
Since August 2020, the NYC Taxi & Limousine Commission (NYC TLC) has setup a system that reviews the number of NYC for-hire vehicles (FHVs) there are and decides whether the July 2018 FHV Cap (aka ‘TLC Plate Cap’) should be lifted. “For-Hire Vehicle License Determination” reviews are conducted twice a year, in February and August. The results and decision of the inaugural August 2020 review were published in September 2020. The findings of the next review should be published either this or next week. In the initial review, Commissioner Heredia Jarmoszuk stated:
“As the City progresses through its phased reopening, there has been a gradual increase in ridership…Presently, there are enough vehicles across all segments of the for-hire transportation industry to service demand. Therefore, it is necessary to extend the for-hire vehicle licensing pause. TLC will conduct a full review again in February 2021.” – TLC Commissioner Aloysee Heredia Jarmoszuk
Although ridership levels have begun to recover (see official NYC Uber data below) it may take some time for them to return to pre-pandemic levels (in NYC) for several reasons, including work from home (WFH) trends permanently decreasing morning and evening commute volumes and the slow return of international travel / tourism. That being said, nightlife and general volumes may sharply rebound once COVID case levels decrease. In addition, the penetration rate (% of population who has rideshare apps) of Uber / Lyft users will likely be higher as younger NYC residents, such as new college students, are more likely to opt for apps vs. yellow cabs.
Yellow Cab Struggles
As our subscribers will know, the yellow cab industry is going through an existential crisis at the moment. In fact, the crisis has now culminated in the City backing a $65 million financial assistance plan for yellow cab medallion owners. Why we believe this is relevant for the FHV License Determination is the fact that it would likely be in bad taste to allow more TLC plates on the road when that crisis is still ongoing. In fact, one of the core complaints against the TLC / City from the yellow cab industry was the fact that so many TLC-plated vehicles were allowed to be added, ultimately diluting the scarcity value of the medallion. With this backdrop it seems very unlikely the TLC will lift the plate cap for at least the remainder of 2021. I also believe they will only allow for additional TLC plates when they see yellow cab utilization/trips stabilize (i.e. if 5,000 yellow cabs aren’t working, it wouldn’t make sense to add more TLC cars).
As the chart at the top of the article shows total active TLC plates have declined 17% since the pandemic began in March 2020 and continue to fall off. What’s interesting is although it may take a while for total trip volumes to return to pre-pandemic levels, the trip per car ratio (i.e. Total Trip Volume / Total TLC vehicles) may bounce back quicker given the vehicle supply has reduced (i.e. 20% less cars, but only 10% less trips). This would also imply increased earnings for the drivers that remain and ultimately stabilize (and increase) TLC driver earnings. As we head into a post-pandemic world, especially after stimulus and enhanced unemployment benefits expire in late summer, I also expect to see Uber and Lyft revert back to wait listing prospective NYC drivers and add back the scheduler to meet NYC TLC minimum pay standards.
WAVs & EVs
Finally, we also wanted to break down the growth rate of WAVs and EVs, which as you know are exempt from the TLC plate cap. The growth rates for both type of vehicles have been impressive and it would be interesting to see if the exemption remains or if the TLC also caps WAVs and EVs. My guess is it’s unlikely they will cap these cars, at least in the near future, given the City’s goals of increasing accessibility and promoting the use of EVs. The only scenario I foresee the TLC capping EVs/WAVs is if they the vehicle supply starts to increase by more than 200 to 300 vehicles per month. It’s interesting to note that WAVs & EVs combined now represent 3.2% of all TLC plates.
Auto Marketplace NYC Newsletter is written by Dawood Mian, Founder & CEO of Auto Marketplace NYC. He covers the NYC for-hire transportation industry and related news. Search Auto Marketplace NYC for cars, parts, tires, technicians, body shops, reviews & more.