This working paper assesses the timing of cost-effectively electrifying shared mobility fleets in U.S. cities, with a focus on ride-hailing. We develop a total cost of operation metric for conventional, hybrid, and electric vehicles in eight U.S. cities. We incorporate regional variation in incentives, taxes, and energy costs and apply vehicle technology improvements to assess the changing purchase and operating costs through 2025. Within the analysis, we also assess the importance of driver access to home charging on electric vehicle operating costs. We track the shift in per-mile operating costs and the associated payback period for electric vehicles relative to conventional and hybrid vehicles under a variety of use cases.

Although we analyzed several different shared electric vehicle cases, we ultimately focused our analysis on ride-hailing applications, and we offer four main conclusions:

Based on underlying economics, ride-hailing vehicles are ripe for electrification. Because of their greater annual mileage, typical full-time ride-hailing drivers have fuel savings that accrue 2 to 3 times faster when they buy more fuel-efficient vehicles. In addition, because ride-hailing and taxi fleets approach vehicles from a commercial perspective, this could help make economic metrics regarding fuel savings and payback period more compelling than for typical private vehicle owners.

Even without purchasing incentives, BEVs will become the most economically attractive technology for ride-hailing operations in the 2023–2025 time frame. Our central case scenario has electric vehicles becoming the most economically attractive option for ride-hailing drivers by 2023. For especially high-annual-driving ride-hailing vehicles, hybrids retain their advantage until 2025, due to electric vehicles’ fast charging needs. Electric vehicles beat conventional and hybrid vehicles on economic grounds in this time frame due to declining battery costs, which leads to lower-cost, longer-range electric vehicles that do not need to charge as frequently.

Access to affordable charging will be critical to unlocking the economic benefits of electric ride-hailing. Electric vehicles become more attractive than conventional and hybrid vehicles most quickly in cases where drivers have access to overnight residential charging. Greater reliance on public fast charging increases operating costs by about 25% due to higher energy costs from fast charging and also greater opportunity costs from time spent charging. For electrification to become a viable mainstream option for ride-hailing drivers, greater access to lower-cost overnight charging infrastructure at homes, multi-unit dwellings, at the curb, and at public locations will be important.