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E-taxi fleet operations can be viable business

Shenzhen’s e-taxi fleet has been in operation for nearly three years using BYD’s BEV, the e6.

Although many suspect that China’s vanguard city for reform and leading EV maker BYD have decided to run an e-taxi fleet more out of concern for being political correct promoting green transportation, the expanding operation from 50 to 300 e-taxis in Shenzhen proves that it is developing into a viable business that provides both satisfactory service to customers and profitability for the operating company.

The potential profit comes mostly from the price difference between gasoline and electricity. Money saved from fuel cost at Pengcheng EV Taxi Co.’s operation could add up to ¥400,000 ($64,200) in five years, greater than the cost of the e6.

The e-taxi also has two merits over a regular taxi. Consumers prefer the e6 because they save on the ¥3 bunker surcharge in each trip, leading to a higher occupancy rate for e-taxis. The daily work load for e-taxi drivers is also less intensive.

Initial worries about the e6’s limited drive range in daily operations and possible long charging time have effectively been eased once drivers become more experienced with both their working routes and accustomed to flexible charging.

Veteran drivers know well about where to find idle charging poles so as to avoid waste of time in queuing up for charging. Drivers can also decide when to charge their cars during the day, whether at slow time, during lunch, taking a break or even in rush hours to avoid traffic jams.

Shenzhen’s e-taxi fleet operation is a new business endeavor that has gone through twists and turns at the beginning. The company must get to know not only the performance and constraints of BEVs, but also how to assess driver performance and maintain their income levels for steady employment.

Today, except for a basic salary, e-taxi drivers enter into a contractual relationship with Pengcheng as regular taxi drivers do with their companies. After less than three years of operation, the good news is that Pengcheng has stopped losing money and is now breaking even. It is only a matter of time before it becomes a profitable business.

For all its worth, the Shenzhen e-taxi fleet operation proves to be a viable business model even though it started with some government help and subsidy. The little sparkle in Shenzhen may start a prairie fire of taxi electrification across the country which is under energy safety pressure and increasing carbon emission pollution.

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