M A R K E T I N S I G H T

The Future of Mobility

Mayor of London Mandates Zero Emission Capable Taxis

By Martyn Briggs - Senior Consultant

Frost & Sullivan | Market Insight

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THE FUTURE OF MOBILITY - MAYOR OF LONDON MANDATES ZERO EMISSION CAPABLETAXIS ONY BY 2018

From the 1st of January 2018, all newly licensed taxis in London will have to be zero emission capable– the Mayor and Transport for London (TfL) are working with five manufacturers to realise this challenging goal.

London’s Mayor, Boris Johnson, sent shock waves throughout the transportation and taxi world on the16th of January 2014 as he announced plans that will mandate only zero emission capable taxis beinglicensed as black cabs. Whilst this will be subject to a full public consultation in 2014, it sets a clear message to both the industry and to authorities worldwide that air quality is to be taken seriously, andthat working in partnership with manufacturers can realise the goal of zero emission Urban mobility inmega cities such as London. Frost & Sullivan believe this trend will continue in the coming years, withseveral cities adopting either dedicated taxi programmes, or ensuring only low emission vehicles arelicensed.

Whilst the Mayor’s message will undoubtedly cause a stir with drivers, politicians and commentatorsalike; this announcement has been coming for some time. London has over 22,000 licensed black cabs,and their iconic design, quality, and accessibility is renowned globally. However, with 88 per cent of taxitrips beginning or ending in Central or Inner London, and with average traffic speeds of just nine milesper hour in these areas, the pollution from these vehicles has been completely disproportionate withLondon’s aspirations of becoming the United Kingdoms ultra low emission pioneer. So much so, thatTfL estimate that between 30-35 per cent of the most polluting diesel emissions (PM10’s) in centralLondon are from taxis alone. In a time where several major automotive manufacturers have developedzero emission capable vehicles, clearly there is an opportunity to eradicate such harmful emissions fromour cities forever, and London is looking to do exactly that.

This is mainly predicated on the industry being able to deliver the city’s aspirations of zero emissioncapable taxis, and the Mayor has chosen to deliver this announcement now that five key manufacturershave pledged to develop their solutions by the stated timeframe, namely Karsan, Frazer Nash/Ecotive,Nissan, Mercedes Benz, and of course the London Taxi Company.

Karsan are developing a full battery electric and range extended version of their Concept V1 vehiclethat was initially developed for the Taxi for New York programme, and now redesigned in an iconicBritish style in collaboration with London’s Royal College of Art. With the current Concept v1 vehicleon display at the Low Emissions Taxi event, and already having been extensively piloted, and demonstratedto TfL, the Mayor’s office, and at Frost & Sullivan’s Urban Mobility Workshop, the next steps are to pilota fleet of the redesigned vehicles in 2015, with full series production and sales underway in 2016. Frost & Sullivan were proud to play a pivotal role in the development of this project, having undertakenextensive market research and consultation on behalf of the innovative Turkish manufacturer. The othermanufacturers in the race to develop the next generation of London taxis include;

• Fraser Nash/Ecotive: after closing operations in 2006, the Metrocab are back in business with the backing of Fraser Nash technology; this high specification range extended plug in hybrid taxi is claimed to provide over 75mpg, a 350m combined range, which would save drivers30-40 pound in running costs. The company will be piloting up to 200 of the taxis in 2014, afterwhich a date will be announced on their commercial launch;

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• London Taxi Company (LTC): whilst it was the hydrogen powered taxi on display at the event (developed as part of an initiative for the London 2012 Olympic Games), LTC announced their plans to marry the successful features of the previous TX4 taxi, the turning circle in particular, with a plug in hybrid range extended electric powertrain based on technology from their parent company Geely (and Volvo, also part of the group). No dates were specified as part of the event;

• Nissan: having recently redesigned and showcased their NV200 taxi in January 2014, the petrol powered version of the taxi, which is due for sale in 2014, will be accompanied by a full electric version of the same vehicle by 2015, based on the technology of their Leaf vehicle, which has now sold over 100,000 vehicles globally;

• Mercedes: have announced their next platform of the Vito Taxi, sold in London since 2008, which will include “zero emission capable concepts”, although no further dates or details have yet been confirmed.

There are several implications of such an announcement; firstly, with the 15 year taxi age limit thatwas introduced in 2012, over 3,000 of the most polluting cabs have already been removed from London’s streets, and by mandating zero emission capable taxis only from January 2018 would meanthat all of London’s 22,000 taxis would be zero emission capable by 2033, assuming the 15 year agelimit is kept. The consultation that’s about to get underway with the taxi trade will no doubt considerthe reduction of this age limit, perhaps by imposing lower age limits to combustion engine poweredtaxis. As such, the main benefit of such a proposal is to greatly reduce emissions in central London,where poor air quality is estimated to cause over 4,300 premature deaths per year.

However there are several other benefits; the lower noise from such vehicles for example, as well asimproved safety features (Karsan is developing a cyclist friendly signalling system on the rear doorsupon opening and closing of the vehicles), and accessibility, as most of the vehicles have improvedfeatures such as automated ramps. Finally, several economic benefits would accrue, both directly inassembly of the vehicles, many of which will be assembled in part in the UK, and to new suppliersproviding part of the value chain to these manufacturers.

However, such an aspiration for zero emission capable taxis will also have its challenges, especiallygiven the timeframe of under four years from the announcement, which makes TfL’s engagement withmanufacturers and taxi drivers so important. Having had several discussions over the past two yearson this topic with drivers and industry experts alike, the key concerns noted are the purchase cost of the vehicles, lack of public charging stations, issues with maintenance/parts, and the range of the vehicles. Significant resource is being channelled into overcoming all four of these areas as follows;

• Purchase costs: The Office for Low Emission Vehicles (OLEV) are in discussions with the Green Investment Bank around financial options to aid the transition, as well as maintaining the plug in car/van grants of £5,000 & £8,000 for such vehicles alongside several otherincentives. However, encouragingly all of the manufacturers proposing new solutions areaiming at retail prices to be competitive against today’s London taxi prices;

• Charging stations: The source London network of 1,400 charging points will be operated by IER from summer 2014, who aim to increase to 6,000 charging points by 2018 with

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targeted taxi services. In addition, TfL are undertaking extensive research on this topic to understand the need for charging stations for taxi drivers, and their location andimpacts to them;

• Maintenance and parts: Each manufacturer has given assurance over the warranties of the vehicles and are likely to adopt a battery leasing offer similar to those seen by manufac-turers of the electric vehicles available today;

• Range anxiety: With 82 per cent of London taxi drivers living in London, and the average daily taxi mileage estimated by Frost & Sullivan at 110 miles, the majority of drivers could feasibly undertake their daily operations on a single charge of ~100 miles, with a charge of the vehicle at a break point during the day; however this topic is likely to be the main area ofcontention amongst drivers, which is why the range extended taxis are likely to be the most realistic and popular models initially, catering for drivers of all requirements, and ensuring no taxi driver is unable to take or complete a fare due to battery level shortages.

Whilst these challenges are not insignificant, it is encouraging to see the levels of support that TfL andthe Mayor’s office are providing to the taxi trade to ensure this much needed announcement is asfeasible as possible. Having participated in several of these meetings, it is clear of their desire to engage on all aspects of the delivery, from design and the concept of the vehicles, down to the charging point locations and gathering comprehensive views of the drivers. This level of support andinvolvement will be critical to ensuring the 2018 target is met.

London has clearly demonstrated its desire to act as a pioneer in the taxi market, in terms of ensuring continued high standards for customers, but now with the added assurance on air quality tobenefit London’s population as a whole. This is likely to be replicated throughout cities in the UK andglobally, with London being the catalyst for a new wave of zero emission urban mobility through acities taxi trade. Whilst five manufacturers have announced their plans at this announcement, Frost & Sullivan expect several more manufacturers to follow, grasping the opportunity of city widetaxi programmes, and showcasing their vehicles and new zero emission capable technologies in someof the most strategically important mega cities around the world. Today we came one step closer toemission free urban mobility in London; the race for zero emission taxis in other cities globally willundoubtedly now begin!

Frost & Sullivan will be commencing a global taxi market research study in quarter one of 2014; andwould like to seek your views as inputs to this study, which will cover the global market size, andidentify cities looking to adopt initiatives such as what we’ve seen in London, identifying the vehiclesand manufacturers that are reacting to this, to assist in identifying the opportunities this market hasto offer. This topic will also feature at Frost & Sullivan’s annual Urban Mobility 3.0 workshop, to beheld in London on June 26th, which will also feature the new Karsan Concept V1 being developedspecifically as a London taxi, who are sponsoring the event.

For more information on Frost & Sullivan’s mobility research, please contact the author:

Martyn Briggs: martyn.briggs@frost.com Join our LinkedIn group: Future of MobilityFollow us on Twitter: @FS_Automotive

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