Rebate Cutoff Ups Cost of Uber Bid for Greener Fleet

An Illinois-based car dealer says the loss of state rebates for green-vehicle purchases has unexpectedly raised his cost of purchasing electric vehicles earmarked for ridesharing service Uber.

Doug Snower, president of Green Wheels USA, tells WardsAuto he leased about 15 cars as program pilots to Uber contract drivers anticipating rebates of $4,000 per vehicle through the Illinois Alternate Fuel Rebate Program, which the state suspended last week.

A terse, two-sentence notice about the suspension appears on the Illinois Green Fleets website, managed by the state Environmental Protection Agency, which administers the rebate program designed to encourage purchases of low-emissions, alternative-fuel vehicles.

Otherwise, neither the office of newly installed Gov. Bruce Rauner nor the state EPA have issued any public statements about the status of the program. Rauner’s office did not reply to several requests for comment by WardsAuto.

Uber already is active in the Chicago area but the ridesharing service, seeking to offer more environmentally friendly transportation, initially suggested Snower buy 400-500 Chinese-built BYD e6 electric vehicles to lease to its drivers. Snower instead planned on 200 purchases, a target he hoped to reach within a year.

The e6’s base price is $50,000. After subtracting a $7,500 federal tax credit, a $10,000 green-vehicle rebate from the City of Chicago taking effect April 8 and the $4,000 state rebate, the price drops to $28,500. Snower’s EV purchases anticipated the Illinois Green Fleet rebates, but the suspension is retroactive to January 2014 and the state has issued no rebates to him or other applicants.   

Loss of the state rebate bumps the price up to $32,500.

Drivers for Uber, most of whom are nonprofessionals who use their own vehicles, may negotiate leases with Green Wheels but are not obligated to do so. Uber, however, reserves the right to approve individual operators’ vehicles and has given the BYD e6 a blanket endorsement, with Snower offering favorable terms for leasing the EVs.

Those terms now are less favorable in light of the cash-strapped state’s suspension of the $4,000 green-car rebates. Snower says he plans to continue purchasing e6 vehicles to lease to Uber drivers, despite the cost per unit rising from $28,500 to $32,500.

“We’re scrambling to see how this affects our bottom line,” he says, calling the state’s action “substantially detrimental to our business.”

Uber has grown from a small San Francisco startup in 2009 to an international business worth more than $41 billion. The service, which allows customers to order rides with their mobile devices, aims to become a more environmentally responsible company as its drivers in Chicago and presumably other communities sign up for green vehicles.

BYD Could Face More Headwinds Without Windy City Deal

Suspension of the state rebate could complicate BYD’s efforts to gain a foothold in the North American EV market, even though it is China’s top-selling brand of electric passenger vehicles and the e6 was among the EVs eligible for the Illinois rebate even before Snower began purchasing them.

Snower spent about 25 years running conventional auto dealerships before establishing his green-oriented business which now, aside from EV sales, includes the full servicing of electric, hybrid and other alternative-fuel models and building EV charging stations.

He admits picking BYD’s e6 might seem more than a little counterintuitive, particularly since earlier models of the EV earned less-than favorable reviews for what was described as the car’s uninspiring, utilitarian exterior and rudimentary interior.

Snower argues the ’15 e6 has an engaging profile, while the leather interior is both roomy and comfortable.

Since Green Wheels “isn’t a one-trick-pony,” and in fact deals in the market’s gamut of green autos, Snower says he knows the lineup of current EVs on the market “intimately” and is convinced the e6, built and marketed primarily for use as a taxi in other regions of the world, is the best choice for Uber.

The EV’s two biggest selling points, he notes, are its range, which he suggests can reach an optimal 200 miles (320 km) on a single charge – although the U.S. EPA lists the e6’s single-charge capacity at 127 (204 km) miles – and the superior charging station that BYD installs for free and can fully charge a model in about two hours.

Snower says the Uber deal was the biggest leasing arrangement of its kind he’s negotiated, as Green Wheels fielded inquiries about the green auto segment from other taxi companies but only sold them EVs on “a very small level.”

He looks to his developing relationship with Uber, which conceivably could lead to Green Wheels supplying EVs to Uber drivers across the nation and perhaps further, as a game-changer. So, even though the rebate suspension poses a financial detour for Snower’s operation, “I wouldn't say the plug is pulled,” he says. “But the numbers now need to be re-crunched.”

Snower vows to find a way to fulfill his commitment to arming Uber with environmentally friendly vehicles, along with keeping Green Wheels moving forward financially – even if it means finding new funds through other energy programs, or simply keeping down the cost of his inventory by not solely relying on EVs.

Green Wheels could begin focusing its business on “other products and services,” such as hybrids, he says.

Ultimately, if the suspension isn’t lifted, Snower could opt to altogether move Green Wheels to another state, away from Illinois, once considered one of the best states to own an EV.

“Where there’s a will, there’s a way,” Snower says. “We’re not going to let this put us out of business.”