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The ride-share leader struggles with charging deserts and high prices

LONDON—On a sleepy residential street here, workers last month installed four electric-vehicle chargers, the first in the city to be funded by Uber Technologies UBER 3.28%increase; green up pointing triangle as part of its plan to wean its fleet off gasoline.

The chargers—four plugs on two parking-meter-size posts—represent a slow start. Uber had initially planned to have hundreds of chargers installed by now and has more than 600 left to go for its plan—designed to switch all of its approximately 45,000 drivers in London to electric vehicles by the end of 2025.

“It’s taken us almost three years to get to one going in the ground,” said Christopher Hook, Uber’s global head of sustainability. “It really does take a long time.”

Uber wants to lead the electric-vehicle transition in London, where tightening emissions restrictions are nudging drivers to go electric. But it has run into surprising obstacles and is behind on its road map. Its experience is a warning for companies with ambitious sustainability goals and for policy makers counting on a private-sector-powered surge in electric-vehicle use.

Charging EVs has gotten more expensive in many parts of the world and a lack of infrastructure makes charging time-consuming and stressful. New electric vehicles are still relatively expensive and there aren’t enough affordable ones available in the used-car market.

Uber has long touted London as the showcase for its green efforts. Chief Executive Dara Khosrowshahi wooed city officials with the all-electric pledge nearly five years ago. At a sustainability event here last month, he said the city is establishing a proof of concept for Uber’s plan to go all electric worldwide by 2040.

“Our experience in London has set the stage for us now to begin to scale electrification on a global basis,” Khosrowshahi said.

Uber doesn’t purchase its drivers’ vehicles, so it has to provide incentives. It has reduced the commission it takes from EV drivers on its Uber Green service, struck reduced-price deals with carmakers and rental companies and arranged discounts at charge points. In London, it charged passengers a clean-air fee on each ride, which it put aside for drivers to subsidize future EV rentals or purchases.

Still, the number of Uber drivers in electric vehicles in the city has risen more slowly than the company had expected, according to Uber employees, others familiar with the company’s plans, and a review of company announcements.

London drivers have claimed less than a third of the 145 million pounds, or about $186 million, in clean-air fees Uber collected. Even with thousands of dollars worth of handouts, EVs still don’t make sense for many drivers.

“What would make a difference is more charging, more range, lower-cost cars. All of those things haven’t happened as fast as we were promised,” said Vince Cunningham, an Uber electric-vehicle driver in London who works as what Uber calls an EV ambassador and hears similar complaints from other drivers. “More needs to be done.”

Electric-powered rides make up about 19% of miles driven on Uber trips in London, the company said. That is up 5 percentage points from around a year ago and a long way from the 2025 target of 100%.

“I came into it expecting it to be hard,” Hook said. “If we don’t make it to 100%, I’ll be disappointed.”

Uber is investing $800 million worldwide to subsidize the switch to EVs. It says it will be fully electric in U.S. and Canadian cities by 2030 and half electric, in aggregate miles driven, across seven of the largest European cities by 2025. It plans to go all-electric in cities everywhere else by 2040.

In the U.S., 5% of miles driven on Uber are currently on electric vehicles. In California, the number is more than 10%. State law requires it to reach 90% by 2030.

Other companies have suffered setbacks in EV plans. In California, trucking companies have been slow to go electric because of charging limitations.

This past week, a group of automakers including BMW, General Motors and Mercedes-Benz said they plan to collectively invest $1 billion in a joint-venture company to try to build 30,000 fast chargers in the U.S. over several years. The joint investment is modeled after a similar company in Europe, Ionity, that was formed in 2017.

Tougher laws helped launch Uber’s efforts in London. In 2017, the U.K. capital announced it would expand daily fees for older, more polluting cars to operate in the city center. The next year, it said that by 2021 it would only exempt fully electric vehicles from a separate daily congestion charge.

Uber, which was then working to mend its relationship with cities around the world, including London, said it would piggyback on London’s electrification efforts with its own program.

When Hook took over Uber’s clean-air plan in London in the summer of 2019, nearly a year had passed since the company’s pledge. It had 100 electric vehicles on the road.

“That was a surprise to me on Day 1,” Hook said. Uber says it would be further along in London if not for Covid-19, which stopped much of its rides business and snarled supply chains.

Hook set to work trying to solve the cost and charging problems. The upfront costs to purchase or rent EVs is generally much higher than for gasoline vehicles. And the opportunity cost of taking time off to charge at peak hours can sap 20% of a driver’s earnings, making at-home, overnight charging far more economical, Uber estimates.

Uber targeted neighborhoods known as charging deserts—with lots of Uber drivers but limited on-street charging. The company approached five London boroughs with matching funds for hundreds of on-street chargers. One borough rejected the money because it had better offers. Another rejected it over control issues.

“Uber’s funding—though welcome—would have given the firm a say in where charging points were installed,” said Lutfur Rahman, mayor of Tower Hamlets, which turned Uber down.

Three boroughs agreed, but the planning and tender process has been slow. The first four charging points were turned on in the east London borough of Newham in June, after years of back and forth.

An electric charger in Newham, a borough in eastern London. PHOTO: SAM SCHECHNER/THE WALL STREET JOURNAL

Uber’s strategy has shifted toward discount deals with rapid-charging hubs run by operators such as BP in such places as public parking lots, where deployment has been faster.

Last year, surges in electricity prices following Russia’s invasion of Ukraine raised the cost of operating electric cars. The end of U.K. subsidies for electric-car purchases and rising interest rates also hurt demand, said Gurinder Dhillon, CEO of Otto Car, which rents out electric cars and supplies drivers with around 3,000 of the 10,000 EVs Uber has in London.

Uber’s target of getting from 10,000 electric cars in London to 45,000 in the next 30 months is reminiscent of President John F. Kennedy’s moonshot goal in 1961, Dhillon said.

“It’s not impossible,” he said. “But it’s hard. It’s a hell of a goal.”

In some other European cities, where Uber will have more time to get fully electric, the shift is happening faster than expected, the company said.

In Madrid, one fleet partner is tackling the charging-time dilemma with a pilot program to buy cars with swappable batteries that can be changed in minutes, said Anabel Diaz, who leads Uber’s ride-hailing business in Europe, the Middle East and Africa.

At the sustainability event in London in June, Uber demonstrated technology that taps into Uber drivers’ battery data to suggest where and when they should charge to maximize earnings. Another feature allows drivers to filter out trip requests that would put them at risk of running out of battery power.

Khosrowshahi said at the event that Uber drivers are going electric faster than the general public and that they help showcase the technology for riders.

“It’s a challenge,” he added, “that’s bigger than Uber.”