The New York City-based company Revel, best known for its moped-share program, is hoping to crack into the app-based taxi market with a small fleet of 50 blue, electric Teslas. The company was hoping to start operating this month in Manhattan under a loophole in city rules, which allows new taxis on city streets if they’re either electric or wheelchair accessible. But the city is claiming there are enough taxis already, and the loophole was intended for existing companies. It now appears poised to eliminate the loophole, dimming Revel’s push to add electric vehicles to the city’s for-hire taxi market.

The Taxi and Limousine Commission is holding a hearing on its electric vehicle exemption rule on June 22nd, which is also primary election day. In its notes on the proposed rule change, the TLC writes that since 2019, when restrictions on new taxis went into effect, it has allowed 400 new battery-powered vehicles on the road. 

“Adding more vehicles to the FHV [for-hire vehicle] fleet, battery, electric or otherwise, will increase traffic congestion and, in doing so, slow the movement of traffic and increase greenhouse gas emissions,” the TLC notes. 

In 2019, as congestion from a flood of new for-hire vehicles was clogging city streets, as well as decimating the livelihoods of an already hobbled yellow cab industry, Mayor de Blasio and the City Council took action to curb the e-hail industry with a slew of new rules and regulations. It included capping the number of for-hire vehicles that could operate on city streets, as well as regulating how many hours an Uber or Lyft driver could cruise around looking for a passenger, among other measures. 

But Revel claims it’s different from the other e-hail taxi services. In addition to using only battery-powered Teslas, it claims it has a more responsible business model. Rather than treating drivers as gig workers, Revel promises to hire existing Uber and Lyft drivers with TLC licenses as employees, which would allow them to earn a minimum wage, as well as sick days and paid time off. Revel said its drivers will only use the company’s Teslas for work, and won’t be required to lease or buy the vehicle.

The company also pledges to build electric vehicle charging stations across the city, which would be open to the public.

“This is literally everything this mayor and the TLC have always wanted and Revel is putting it on a silver platter for them,” said Frank Reig, CEO of Revel. “Instead, this mayor is putting on a silver platter a monopoly to Uber and Lyft, killing any competition to Uber and Lyft.”

Uber and Lyft drivers already earn a minimum wage, thanks to legislation the city passed in 2018. Still, drivers continue to push lawmakers for other rights, such as unemployment benefits during the pandemic. They’re also pushing lawmakers in Albany to pass other pay protection laws.

Urban transportation consultant Bruce Schaller, who was one of the first people to link e-hail taxis with the city’s growing congestion problems, thinks the city is right to be wary of adding more taxis to the road, but he said it shouldn't stifle competition either.

“Uber and Lyft came in as a disrupter of yellow cabs, so for the incumbents to be protected from another disruption seems a little backward,” said Schaller. “You have to find a way to have new companies come into the existing industry, so you don’t repeat the sins of the past.”

Advocates with the Tristate Transportation Campaign are also disappointed with the city for its apparent effort to stop Revel from introducing e-taxis. The group primarily advocates for mass transit, as well as biking and other non-vehicle options. But, it said taxis are still a more environmentally-friendly option than owning a car, and that the next generation of taxis should be electric. 

“This seems like a no-brainer for the city to support,” said Lauren Bailey, Director of Climate Policy at Tristate Transportation Campaign. “For something like a new electric vehicle ride sharing service to come on the market, I’m frankly surprised there aren’t more innovators in the market right now.”

But Ben Fried with Transit Center shares the city’s concern about Revel bringing new taxis to the streets. He said they would just slow down buses, and exacerbate the city’s congestion problems.

“It sounds good that it’s an all electric fleet, it’s a cleaner version of Uber and Lyft, but if you are going to add thousands of electric vehicles to the streets, that’s still going to have a negative consequence of slowing down our bus service and it’s not going to be green in the long run,” Fried said.

Revel claims that by hiring existing Uber and Lyft drivers for its 50 Teslas, no new cars would be added to the streets.

And at least right now, there does seem to be a need for more taxis on the streets.

In April there were 59,592 yellow and green taxis, as well as for-hire vehicles in the five boroughs. Uber and Lyft prices reportedly have spiked as the demand for taxis appears to be outstripping the supply. In April, the  number of taxis on the road was a little less than half the number before the pandemic, according to the TLC. There were 111,493 taxis on the road in January 2020.

But Fried also wonders about Revel’s long-term plans. Just 50 cars isn’t necessarily a problem. It’s what comes next.

“The services only work if they are really operating at scale,” he said. “It’s not a useful service if people are waiting a really long time to get picked up because there’s hundreds of vehicles circulating, instead of thousands, so it seems risky to me to give a company carte blanche when we know that the incentive is to inject thousands of vehicles into the system.”

This appears to be exactly the concern of the city. 

The Taxi and Limousine Commision, which regulates the taxi industry, declined to respond to  questions about Revel’s allegation that the city is blocking the company’s entry into the for-hire vehicle market. But a spokesperson for Mayor de Blasio’s office sent a statement on behalf of the TLC commissioner throwing cold water on Revel’s plans.

“TLC capped for-hire vehicles because supply already exceeds demand,” TLC Commissioner Heredia Jarmoczuk wrote in the statement. “The electric battery exemption exists to encourage already-licensed cars to go green, not to flood an already saturated market or to disenfranchise the Yellow Taxi sector in Manhattan. This ride-share scheme deviates from the spirit of those rules, and TLC will not cut corners in doing its full diligence.”

Revel has a track record in the city that may give the TLC additional pause. Last year, the company temporarily suspended scooter operations after two users were killed. Revel returned shortly after with updated training and safety protocols. Some riders have filed lawsuits against the company for injuries they blame on faulty brakes or balding tires.

In the past, the city failed to cap for-hire vehicles when Ubers and Lyfts quickly swelled on city streets, displacing yellow cabs. Still, another new ride-hail company—also focused on getting drivers better benefits as Revel promises—launched this month without any problems from the city. It uses existing TLC-licensed vehicles instead of adding new ones to the road.