The document discusses the financial and environmental analysis of New York City's taxi fleet transitioning from the current fleet dominated by the Ford Crown Victoria to the new "Taxi of Tomorrow" - the 2013 Nissan NV200. The analysis compares the costs and greenhouse gas emissions of the current taxi models (Crown Victoria, Ford Escape Hybrid, Toyota Sienna, Toyota Camry, Toyota Prius Hybrid) to the single Nissan NV200 model over 5 years. It identifies economic incentives for different taxi vehicle ownership models and questions some decisions around the mandated Nissan phase-in given environmental and economic factors.

1. Ta x i o f To m o r r o w
Where are we going?
Green Accounting
Spring 2012
1

2. Team Members:
Stefano Vrespa
Jessica Esposito
Scott Miller
Chuck Samul
Carlos Coella
2

3. Background 5
A Cab history 5
PlaNYC and the Taxi of Tomorrow 6
Financial Analysis 8
What’s under the hood 8
e analysis 11
Our results 13
“e Medallion lease model” 14
A different proposal 14
Environmental Analysis 15
A non explosive phase out 15
Our results 16
Taxi of Yesterday? 17
e real deal 17
Food for ought 17
e Wild Car(d) 18
An electric future 18
3

4. 4

5. year Nissan NV200 phase-in.
In light of our economic and
environmental analysis we question some of the
decisions the current administration made in
regard to the “Taxi of Tomorrow.” We have
proposed and evaluated a new type of
B a c k g ro u n d ownership model that could foster the adoption
of hybrid vehicles, thus decreasing the taxi
In May 2011, Mayor Bloomberg officially
fleet’s green house gas (GHG) emissions.
announced the “Taxi of Tomorrow” finalist
Finally, we end our report by briefly discussing
vehicle model that will be replacing all of the
the challenges and the uncertainties of a
current fleet of 13,237 NYC taxis. However the
potential future electric taxi fleet.
Nissan NV200 hitting the streets in 2013 has
implications for the environment that make it A C a b history
look more like the Taxi of Yesterday. In the
New York City has had motorized public
following report, we discuss a financial and
taxi service since 1897; ironically those original
environmental analysis of the current NYC taxi
taxis were the electric vehicles of the Electric
fleet and the future Nissan NV200 minivan.
Carriage and Wagon Company. However when
e primary objectives of this analysis were to
the company went bankrupt in 1907, the city’s
understand if there are economic factors driving
taxi fleet was quickly converted to gasoline-
the current vehicle-type mix, to identify the
powered vehicles imported from France.
economic advantages between hybrid, non-
Within a decade, American companies like
hybrid and future fleet vehicles, and to
General Motors, Ford Motor Company, and
determine environmental impacts over the five-
the Checker Motors Corporation quickly began
5

6. manufacturing and operating fleets1 . New York decades, with medallions that might have cost
City’s iconic yellow taxis have been petroleum $10 in 1930 now reportedly selling for as much
fueled ever since. as $1,000,000 in 20114 .
By the 1930s, the number of cab drivers
PlaNYC and the Ta xi of
soared over 30,000. During this time, the taxi
Tom or row
“medallion” system that is in place today was
introduced to mitigate concerns about the In 2007 Mayor Bloomberg introduced
proper maintenance and reliability of vehicles PlaNYC, a long-term sustainability plan for
and drivers, as well as the surplus of vehicles on NYC which set the ambitious goal of reducing
the city’s increasingly congested streets. e green house gas (GHG) emissions by 30 % by
Haas Act signed by Mayor La Guardia in 1937 2030. With passenger vehicle emissions
introduced a formal medallion system of taxi making up approximately 18% of all GHG
licenses, limiting the number of licenses emissions in New York City5, a key piece of this
available and thus restricting the number of plan was phasing in more energy efficient taxi
cabs on the road2 . is quantity has fluctuated models than the highly inefficient Ford Crown
between roughly 11,000-17,000; today the Taxi Victoria that dominates the taxi fleet. To
& Limousine Commission (TLC) has limited encourage the adoption of hybrid vehicles, the
the number of licenses to 13,237 medallions3 . Mayor’s Office offered incentives in the form of
is mandated supply restriction has caused the reduced prices on medallions for hybrid taxis,
cost of a medallion to rise considerably over the and attempted to impose a 30-mpg fuel
1 http://en.wikipedia.org/wiki/New_York_taxi#Late_1890s_-_The_Electric_Era
2 http://www.nytimes.com/1996/05/11/nyregion/medallion-limits-stem-from-the-30-s.html
3 http://www.nyc.gov/html/tlc/html/home/home.shtml
4 http://cityroom.blogs.nytimes.com/2011/10/20/2-taxi-medallions-sell-for-1-million-each/
5City of New York, Inventory of New York City Greenhouse Gas Emissions, September 2011, by Jonathan Dickson
and Andrea Tenorio. Mayor’s Office of Long-Term Sustainability, New York 2011
6

7. economy requirement for new taxi vehicles 2009, the project was aimed at developing a
licensed in 2009. At the time, only hybrid new, uniform blueprint for NYC’s iconic yellow
vehicles fulfilled this condition, which were
more expensive than conventional taxi models
and many fleet operators were skeptical of their
reliability and durability as a high mileage taxi
vehicle. As we will discuss in detail in our
financial analysis, another key piece of this issue
is that while individual hybrid taxi owner-
operators realized cost savings immediately at
the pump, fleet operators (whose contracted
taxi fleet that incorporated the priorities of key
drivers bear the cost of gas) do not. As a result,
city stakeholders including taxi drivers, owners,
fleet operators filed suit against the Mayor’s fuel
passengers and city residents. e TLC
efficiency requirements and hybrid incentives,
surveyed taxi passengers and solicited design
which was eventually upheld in the US 2nd
proposals from vehicle manufacturers, which
Circuit Court of Appeals. at court ruled that
resulted in three finalists. In May 2011, the
the city’s attempts violated the pre-emption
Mayor’s Office and TLC announced that the
clauses of the Energy Policy Conservation Act
Nissan NV 200 was officially selected as the
(EPRC) and the Clean Air Act (CAA), and
“Taxi of Tomorrow.” Our analysis compares the
blocked the City from enacting these initiatives.
financial and environmental implications of the
As a result, the Mayor’s Office and TLC
current taxi fleet and the Nissan NV200.
considered another way to increase the
We h a v e c o n s i d e re d s e v e r a l k e y
efficiency of their taxi fleet that focused on
stakeholders impacted by this initiative. TLC is
phasing out the gas-guzzling Crown Victoria:
interested in administrative ease and a stylish
the “Taxi of Tomorrow” project. Introduced in
7

8. Financial
replacement to the iconic Crown Victoria. e
Mayor’s Office has aggressive GHG reduction
goals and is eager to replace the inefficient Anal ys i s
Crown Victoria fleet.
Sur veyed taxi riders prioritize Wh a t ’ s un d e r t h e hood
sustainability, passenger comfort and safety.
In following section we discuss and
And perhaps the most notable of these
evaluate the results of a Net Present Value
stakeholders, particularly in our financial
analysis, are the taxi owners and drivers
themselves. Owner-operators are especially
interested in operating costs, while fleet owners
are most concerned with acquisition and
maintenance costs.
(NPV) analysis performed for the varying
models of the current fleet, and future Nissan
NV200 fleet. e analysis highlights some of
the potential factors that drive the vehicle
choice in terms of fuel efficiency across four
m e d a l l i o n ow n e r s h i p t y p e s , a n d t h e
environmental implications in terms of GHG
emissions, particularly in light of PlaNYC
2030’s GHG emissions reductions goals.
8

9. For our analysis, we evaluated five model doesn’t take into account any initial
different vehicle models from the current fleet. medallion investment. is simplification is
ese five models, which include three mainly due to the medallion’s price volatility
gasoline-powered and two hybrid-electric over the past 20 years – most recently
models, were selected for the analysis because skyrocketing to $1,000,000 – as well as the
they represent a high percentage of the current medallion’s ownership timeframe that varies
taxi fleet, their variations in fuel efficiency, and greatly among owners.
other factors such as ADA requirements. e Moreover, this cost would not affect either
fleet sample considered in our model includes the results or the decision among different
the following vehicles: vehicles if we evaluate the cost of the medallion
• Ford Crown Victoria, 58% of the total as an occurred expense – equal throughout each
current fleet (16 mpg city); type of ownership model.
• Ford Escape Hybrid, 26% (33 mpg); ere are currently four types of
• Toyota Sienna, 9% (17 mpg); ownership models that potentially affect the
• Toyota Camry, 4% (22 mpg); medallion owner’s vehicle choice, and thus the
• Toyota Prius Hybrid, 2% (51 mpg). fuel efficiency of the vehicle. e four types of
e future Nissan NV200 fleet will medallion ownership include the following6 :
consist of a single, non-hybrid model, rated at • Owner operated only: the medallion
25 mpg city, which will replace the current fleet owner drives his own vehicle and pays for gas;
over a 5-year phase-in period starting in 2013. • Owner operated and leased: the
Before discussing the primary medallion owner drives his own vehicle and
assumptions and hypothesis that will drive our pays for gas, and leases it to a second driver
financial and environmental conclusions, it is for an extra shift (who pays for their own
important to emphasize that our financial gas);
6 http://www.schallerconsult.com/taxi/taxifb.pdf
9

10. • Fleet-type: the corporate medallion month, split among the drivers;
owner pays the drivers (average 3 per car) • tips, 15% of the total gross revenue;
based on the shift length – usually 2080 • number and duration of shifts, in
hours per year, drivers pay for gas; proportion to a hypothetical 24-hour shift;
• Long-term lease: the medallion owner • salary, for the fleet-type and the owner
leases the car (2 drivers per car on average), operated and leased model;
drivers pay for gas. • cab lifespan: 5 years for owner-operators
Because we performed an NPV analysis and long-term leases, 3 years for fleet-type
from a vehicle-owner point of view, these ownership7;
differences among ownership models are critical • gross revenue divided between driver
to our assessment. We have assumed annual and owner for the long-term leasing model8 .
gross revenue per vehicle to be $145,200 and ese differences will impact the cash-flow
an average of 64,600 miles driven per vehicle analysis per ownership model and type of car
each year. and they could potentially affect the vehicle
Under this assumption, the contractual choice.
differences among models have a significant Across the four ownership models, gas
impact on the owner’s gross revenue costs always fall on the driver, whether the
independently from the vehicle choice. us, to driver is the owner-operator, paid by a company
perform an NPV comparison among vehicles (fleet-type), or if he leases medallion and
and ownership models we considered the vehicle (long-term lease). While the medallion
following parameters: owner always pays the vehicle expenses, the cost
• a medallion loan of $1,500 total per of gas will affect only the drivers’ income. is
7Per TLC requirements, cars brought into service as cabs must be new models and must be replaced every 3-5
years. Fleet-type cabs are usually driven by “unspecified drivers” and must be replaced every 3 years. (http://
www.schallerconsult.com/taxi/taxifb.pdf)
8 http://www.schallerconsult.com/taxi/taxifb.pdf
10

11. particular variation across ownership models this document.
appeared to be the major factor driving our As displayed in Figure 1 there is a clear
results, and potentially the economic driver economic incentive for the owner-operator to
behind the owner’s choice in vehicle. chose a hybrid vehicle instead of a non-hybrid
Other minor factors that we considered model even under the current gas price. e
in our models were: economic incentive is directly proportional to
• straight line depreciation; the average miles driven per year and to the cost
• zero salvage value after 3 or 5 years, of gas, and is particularly evident for the first
depending upon the conditions previously parameter due to the high number of miles
cited; driven each year. On the other hand, for the
• maintenance and repair costs other two types of medallion ownership (fleet-
proportional to the average miles per year9 ; type and long term lease), there is no clear
• drivers license, vehicle taxi conversion, economic incentive that drives the choice
insurance costs. between vehicles and therefore there must be
other contributing factors, such as maintenance
The a n a l y s i s
costs or reliability, which influence the vehicle
choice.
e tables following include taxi data,
e cost of gas, which is covered by the
ownership data and assumptions. e complete
driver, then becomes the primary incentive just
analysis is an Excel matrix calculating the NPV
for one type of owner’s category – owner-
for each of the 6 vehicle types and for each of
operated cabs—responsible for roughly one
the 4 ownership models, which is attached to
9 http://www.edmunds.com, http://www.autotrader.com, http://autos.aol.com/, http://www.motortrend.com
11

12. third of the total taxi fleet. occurring according to the 2006 Taxi
Two additional results driven by Factbook10 . Secondly, there is a clear economic
economic incentive can easily be seen, First of incentive for an owner-operator to lease their
all, there is an economic incentive for the cab for a second shift and retain part of the
medallion owner to switch from the fleet-type earnings. In light of these conclusions, we
to the long-term lease, a trend that is already propose a potential solution to incentivize the
adoption of hybrid vehicles by intervening
on the dichotomy between who buys the car
and who pays for the gas.
Financial data by ownership type
Additional assumption for ownership types
Vehicle data
10 http://www.schallerconsult.com/taxi/taxifb.pdf
12

13. O u r results
$280,000
$260,000
$240,000
$220,000
NPV - 5 years - 1 car
$200,000
$180,000 NPV - Owner Operated
NPV - Fleet Type
NPV - Long term leasing
$160,000
$140,000
$120,000
$100,000
$80,000
FORD "Crown FORD "Escape" TOYOTA "Prius" TOYOTA "Sienna" TOYOTA "Camry" NISSAN NV200
Victoria"
–owner operated with extra shift –
$280,000
$260,000
$240,000
$220,000
NPV - 5 years - 1 car
$200,000
$180,000 NPV - Owner Operated
NPV - Fleet Type
NPV - Long term leasing
$160,000
$140,000
$120,000
$100,000
$80,000
FORD "Crown FORD "Escape" TOYOTA "Prius" TOYOTA "Sienna" TOYOTA "Camry" NISSAN NV200
Victoria"
–owner operated without extra shift –
Figure 1 – NPV analysis per type of vehicle and
ownership model
13

14. revenue certainty that will yield a net income
equal to or almost equal to (due to a lower
business risk) their current one. e driver will
only be incentivized to pursue this model by a
vehicle-based EBIT at least similar to his actual
gross revenue.
“The Medallion Even by running our analysis under the
lease model” most favorable conditions – using the lowest
NPV for the medallion owner, using the vehicle
A d i f f e re n t proposal that would grant the highest EBIT (Prius), and
using the lowest driver gross revenue (fleet-type
e idea behind this proposed model is to model) – there is a lack of financial incentive
merge the responsibilities of car buyer and gas for the driver to pursue this model.
payer (the driver) in order to incentivize the Incentives such as a lower tax rate, gas
introduction of hybrid cabs (Prius in primis). discount, or other fuel efficiency-based
is choice would be driven by the notable incentives are needed to support the driver and
NPV (or EBIT) difference among the hybrid influence the adoption of vehicles with higher
and non-hybrid vehicle types, even with the fuel efficiency. A potential next step for this
current gas price. We expect the primary effect proposed model could be the analysis of
of this proposal to be the increased adoption of different incentive options and their impacts on
hybrid models within the current fleet and thus the hybrid adoption rate and overall GHG
the overall reduction of GHG emissions, in line emissions.
with PlaNYC 2030 emission reduction targets.
To effectively pursue this model the
medallion owner needs to be incentivized by a
14

15. actual vehicle adoption rate) is 425 grams of
CO2e per mile, and the future average emission
rate will be 431 grams of CO2e per mile.
While this will not result in a significant change
in emissions levels, it is interesting to see how
the Nissan NV200 phase-in is likely to be over
E n v i ro n m e n t a l the next five years and the impact of the current
Anal ys i s fleet’s phase-out. Despite the high proportion of
high-emitting Crown Victoria models that
A non explosive phase dominate the current fleet,
out Upon the assumption that every owner is
willing to maximize their revenue, or that they
In light of PlaNYC 2030’s GHG emission
are pursuing the highest NPV value – meaning
reduction targets, we have analyzed the
that the owner-driver model absorbs entirely
emission levels of the current fleet and the effect
the hybrid vehicle percentage (roughly 28%) –
of the NissanNV200’s five-year phase-in period
the main assumption is a linear phase-out
beginning in 2013.
starting in 2013. It is important to underline
Overall, the
the different lifespan between the fleet-type
Nissan NV200
model (3 years) and the long-term lease model
phase-in will
(5 years), both based on non-hybrid models.
result in slightly
higher emission
levels; the current
average emission
(weighted by the
15

16. O u r results
As shown in Figure 2, the phase-out rate
for the non-hybrid fleet is accelerated because
fleet-type vehicles, which are assumed to be
non-hybrids, are replaced more frequently. us
overall GHG emission levels are initially
lowered between 2014-2015 as gas guzzling
Ford Crown Victorias (16 mpg) are replaced
with the more efficient Nissan NV200 (25
mpg). However in 2017 when the phase-in is
complete, overall GHG emissions will rise
above current levels as hybrid models (33-51
mpg) are replaced by the lower performance
Nissan.
!400,000!' !356,000!'
!350,000!'
!354,000!'
Tons&CO2&equiv.&/&Taxi&model2
Total&Tons&CO2&equiv.2
!300,000!'
!352,000!'
FORD!1Crown!Victoria1'
!250,000!'
!350,000!' FORD!1Escape1'
!200,000!' TOYOTA!1Prius1'
!348,000!' TOYOTA!1Sienna1'
!150,000!' TOYOTA!1Camry1'
!346,000!' NISSAN!NV200'
!100,000!'
total!CO2!eq.!emission'
!344,000!'
!50,000!'
!+!!!' !342,000!'
2012' 2013' 2014' 2015' 2016'
Figure 2 – Emissions levels during 5-year Phase-in Period
16

17. Ta xi of Food for Thought
Yesterday ? Interestingly, the Nissan NV200 is
currently sold in Europe with a diesel engine
The real deal rated at 54 mpg, in compliance with the
current European fuel efficiency requirements.
Based on the financial and environmental
Despite the difference in engine (gasoline vs.
results of our analysis, it is difficult to
diesel), it is difficult to understand why NYC
understand what factors drove New York City’s
would not pursue this model, with nearly
choice for the future taxi.
double the fuel efficiency.
A public survey of 23,000 NYC taxi riders
found that the top three priorities were:
1. environmental sustainability;
2. passenger comfort;
3. safety11.
e Nissan NV200 is a considerable
improvement over the gas-guzzling Crown
Victoria, and did boast the highest fuel
efficiency of the three finalists. However this
model is clearly a step backwards from the high
efficiency hybrid fleet that has been gaining
traction in the NYC taxi fleet in recent years.
Regrettably, the current Nissan NV200 falls
short of taxi riders’ top priority.
11 http://www.greencarreports.com/news/1071606_nissan-e-nv-200-concept-electric-minivan-nycs-electric-taxi
17

18. The W ild
electric motor as the 2012 Nissan Leaf12 .
e e-NV200 Concept model is slated to
Ca r( d ) have a similar range to the Leaf (70-100 miles).
Using a Level 2 charging station, this would
An el ectri c future require 7 hours of charging time. is is a
considerably lengthy time requirement for a
While the Taxi of Tomorrow finalists were
cab, and would severely limit driver shift times.
not explicitly judged on environmental
To mitigate this potential concern, Nissan is
attributes, one factor noted in choosing the
currently working on the development of
Nissan NV 200 was the anticipated availability
quick-charging ports that can charge to 80%
of an all-electric NV200 model by 2017.
capacity in 30 minutes.
Nissan has also stated that the NV200 gas
 e fi n a n c i a l a n d e n v i ro n m e n t a l
model can be easily retrofitted to an electric
implications of the transition from gas-powered
engine, once the technology becomes available.
to electric-powered vehicles are difficult to
Nissan, who already manufactures the all-
determine without knowing the future energy
electric Leaf, is eager to establish itself as a
profile or rates of the electric grid. According
leading electric car manufacturer.
to the most recent EPA eGRID data, NYC’s
In anticipation of a potential electric fleet,
electricity grid mix is primarily nuclear (43%),
TLC, city officials and Nissan are piloting six
gas (34%), and oil (20%)13 . Further analysis of
all-electric Nissan Leaf taxis beginning in 2012.
the emissions outputs from the grid would be
is pilot program is intended to test the
necessary to determine whether electric vehicles
performance of EVs under typical high mileage
are the right choice for NYC.
conditions. e Nissan e-NV200 will have the
same 24-kWh lithium ion battery and 80-kW
12 http://www.greencarreports.com/news/1071606_nissan-e-nv-200-concept-electric-minivan-nycs-electric-taxi
13 http://cfpub.epa.gov/egridweb/view_srl.cfm
18