Why is Uber retreating from electric car incentives after pushing drivers toward EVs?

Uber spent years trying to make it easier for ride-hailing drivers to ditch gasoline-powered cars.

When Levi Spires, a 51-year-old Uber driver in Syracuse, N.Y., hit a deer and damaged his Prius last year, a $2,000 promotion from the ride-hailing giant enticed him to buy a Tesla. Over 23 months, he earned about $3,500 from Uber Technologies Inc. in additional EV bonuses driving about 139,000 miles. It was all part of Uber’s goal to rapidly move its drivers into cleaner cars.

But things changed last week when Uber discontinued the monthly EV bonuses. Losing the incentive, along with steadily declining hourly earnings, has caused Spires to rethink his future: “My goal is for Uber to not be my main profession anymore.”

Uber needs all the clean miles it can get to reach its green goals and various local regulations. With 38 million daily trips globally, the company’s emissions have nearly doubled in the last three years, and its climate footprint now surpasses the entire country of Denmark. Yet despite the rise in emissions and soaring profits, Uber is scaling back some of its key climate efforts.

The company had pledged to reach 100% EVs in London by this year, and 100% in North America and Europe by 2030, but it’s far short of those goals. The San Francisco-based firm reported earlier this year that about 40% of its miles in London are in EVs, while Europe and North America are at about 15% and 9%, respectively. Instead of enticing drivers into EVs with cash, Uber is ratcheting back extra payments and backpedaling in other ways.

Uber officials acknowledge they will likely miss their green targets, but they say the company is committed to cleaner vehicles, and their drivers in Europe and North America are moving into EVs much faster than the public. “We’re proud of our progress overall,” said Rebecca Tinucci, the former global head of electrification and sustainability at Uber, who recently took over as chief executive of Uber’s freight business.

After long advocating for stronger government policies to speed up EV adoption, Uber did a U-turn this spring and stumped for President Trump’s “Big Beautiful Bill.” This included Chief Executive Officer Dara Khosrowshahi appearing in a White House promotional video for the legislation, which the League of Conservation Voters called “the most anti-environmental bill of all time.” The law slashed clean energy incentives and is expected to slow EV adoption in the U.S. by about 40% compared to previous projections.

A handful of states and cities, including California, New York City and Toronto, have enacted rules requiring ride-hailing companies to rapidly electrify their fleets. Uber is now pushing back, urging California regulators in September to delay enforcement, in part because the scrapped federal incentives make the targets nearly impossible to meet.

Tinucci described a fundamental shift in the company’s approach. Instead of dipping into its profits to throw money at the challenge, Uber wants to tap into the growing market of environmentally conscious consumers who prefer to ride in an EV. “The closer we can align what makes sense for Uber with what makes sense for our sustainability actions, the faster this program is going to scale,” she said.

Uber, to be sure, isn’t the only ride-hailing firm struggling with this transition. Lyft, its main competitor in North America, has quietly pulled the plug on its pledge to electrify its entire fleet by the end of the decade. Lyft representatives declined to be interviewed but said in an email that they’re continuing to help EV drivers by providing bonuses and discounted charging.

Uber also isn’t the only firm with green ambitions to support Trump’s bill. Dozens of companies with low-carbon commitments, from AT&T to United Airlines, supported the legislation and its lucrative tax breaks for corporations.

“These companies absolutely cannot claim to be climate champions,” said Holly Burke, vice president of communications at Evergreen Action, a nonprofit that advocates for climate policies. “When they had a chance to get a big tax break and screw over the climate, they showed us who they really are.”

Officials at PepsiCo, Cisco and United Airlines declined to comment, while Apple and AT&T didn’t respond to inquiries.

Few of these companies, though, match Uber’s reliance on government policies to help address such an enormous carbon footprint.

When Uber unveiled its EV pledges in 2020, it was facing fierce criticism from environmental groups. Research showed ride-hailing apps lured people away from public transit, clogged city streets and generated 69% more emissions per ride than the trips they displaced. “Uber and Lyft are making traffic worse, burning fossil fuels, spewing pollution, all while undermining public transit,” declared a Sierra Club ad at the time, which showed passengers coughing in a vehicle filled with fumes.

The company’s pledge to reach 100% EVs in key markets faced a huge challenge: EVs are more expensive than gas-powered cars, but drivers earn little more than coffeehouse baristas. To help bridge this gap, Uber promised to dole out $800 million over five years (from its own coffers, rider fees and partner discounts) to help drivers switch to EVs. “We expect to be judged against our actions,” said Khosrowshahi in a post.

Uber added an extra $1 per ride for EV drivers in the U.S. and Canada, which could total several thousand dollars a year. In parts of Europe, Uber added new passenger fees that rolled into accounts for drivers, which could then be used as payment toward a new EV. In London, where fees were the highest — initially 15 pence per mile — Uber quickly gathered more than $180 million in these accounts.

But Uber executives emphasized for years that it can only reach its climate targets if governments also help accelerate the transition to EVs. “We can’t do it alone. Climate is a team sport,” Thibaud Simphal, Uber’s then-head of global sustainability, told Bloomberg Television last year. “We need governments to speed up; we need automakers to speed up.”

After the election of Trump, who routinely pilloried EVs on the campaign trail, the company changed its tune on U.S. policies. Despite years of calling for government support, Khosrowshahi told Squawk Box in January that he wouldn’t go to bat for EV incentives with the new administration. “Anyone who bases their business plan based on government subsidies is not doing the right thing,” he said. “I don’t think we need those kinds of assistance … We don’t need subsidies for EVs to succeed at Uber.”

Uber, in fact, desperately needs these subsidies to hit its targets. In a September filing to regulators in California, where Uber is seeking to delay enforcement of EV ride-hailing rules, it modeled how the eliminated federal credits will pummel adoption of electric vehicles. It estimates only 20% of California’s overall miles will be in EVs by decade’s end, so mandating ride-hailing companies to reach 90% in that timeframe is “no longer technically and economically feasible.”

As the company scales back extra payments to EV drivers around the world, it’s winding down its rider-funded programs in London and France. It already terminated its $1-per-ride perk in the U.S. last year, instead requiring drivers to reach 200 rides in a month to collect an extra $100 to $250. This effectively kicked part-time drivers out of the plan. Now, the monthly bonuses for EV driving are gone.

Uber still offers some perks: It negotiates discounts on new cars and charging rates for its drivers. And the company recently unveiled a $4,000 bonus for gas drivers in the U.S. to purchase an EV. But this only applies to a fraction of its drivers in California, Colorado, Massachusetts and New York City — and the offer expires after 2,500 takers.

All of this indicates Uber is on pace to miss its original pledge to allocate $800 million to help EV drivers by the end of this year. It doled out $539 million through the end of 2024, but that amount increased by only $100 million last year. Yet Uber’s operating profits are set to double this year — and it recently pledged to spend $20 billion on stock buybacks. “Under your stewardship,” an investor told Khosrowshahi during a panel in September, “Uber has become a money-printing machine.”

Uber’s Tinucci says tracking its financial outlays isn’t the best way to gauge its commitment to EVs. New levers have emerged to get drivers to switch over, she says, including demand from riders who prefer an EV.

Elgin writes for Bloomberg.