THE GROSSMAN CONSULTING FIRM

Ubers Clean Air Initiative

Proposal

Created by: The Grossman Consulting Firm

Brian Grossman
ICP Project
BUSN 179
Professor Deidre Frontczak, Ph.D.

TABLE OF CONTENTS
0

THE GROSSMAN CONSULTING FIRM

Table of
Contents
Pg 1
Executive
Summary..
Pg 2
Introduction
.. Pg 3
Background and
Necessity.. Pg 4
Cost
Analysis
. Pg 5-6
Assessment
Pg 7-8
Conclusion
. Pg 9
Appendix
. Pg 10

THE GROSSMAN CONSULTING FIRM

EXECUTIVE SUMMARY
There has been a lot of talk in the past couple years concerning the
future of personal vehicles using oil products as a mean of energy. The talk
has been primarily about global warming, pollution, and the dependency
upon non-fossil fuels as oil levels are slowly becoming depleted on plated
Earth. The global car industries have already taken steps to help solve this
problem by designing hybrid and electric cars, but the problem is not enough
people are using these new hybrid and electric cars.
In 2009, transportation accounted for approximately one-fifth of global
primary energy use and one quarter of all energy-related carbon dioxide
(CO2) emissions, which nearly half of those emissions originating form
personal vehicles. 1
Although a variety of clean vehicle technologies and fuels are being
developed, electric or hybrid vehicles represent one of the most promising
technology pathways for cutting oil use and CO2 on a per-kilometer basis.
With a moderately clean electric grid, EVs can achieve 50 grams of CO2 per
kilometer, well below todays most efficient cars, which emit between 100
and 150 grams of CO2 per kilometer. 2
The clean air initiative we are proposing would gradually swap out all
of the non-hybrid vehicles in Ubers fleet with a hybrid or electric vehicle.
1 OECD/IEA, Energy Technology Perspectives 2010, ISBN 978 92-64-08597-8, Paris, (2010)
http://www.iea.org/

2International Energy Agency analysis

2

THE GROSSMAN CONSULTING FIRM

This clean air initiative focuses strongly on sustainability and is in

accordance with the principles of the triple bottom line. This clean air
initiative focuses primarily on the planet and profit aspects of the triple
bottom line. This initiative will definitely help reduce Ubers overall carbon
footprint as hybrid cars emit 29 percent less ground-level air pollution. This
initiative will help Uber increase profits as hybrid cars achieve 20-35 percent
better gas mileage which will be saving Uber drivers a great deal of money
at the pump. By affecting the planet and the profit aspects, this initiative
inherently will improve the overall quality of life; the people aspect.

Ubers Mission Statement:

Uber is evolving the way the world moves. By seamlessly connecting riders
to drivers through our apps, we make cities more accessible, opening up
more possibilities for riders and more business for drivers. From our founding
in 2009 to our launches in over 200 cities today, Uber's rapidly expanding
global presence continues to bring people and their cities closer.

INTRODUCTION
When Uber first started service in March 2009 the company only
offered full sized luxury cars for hire. In 2012, the company launched an
UberX program which made small to mid-size cars available for hire. The
problem is that the profit from the full sized luxury cars is significantly less
than that of cars in the UberX program because those cars are mostly likely
consuming two to three times the amount of gas. Some of these full sized
luxury cars are even using diesel engines which are a lot worse for the
environment than cars fueled by oil. Engines that run on diesel tend to emit
more particles like soot and nitrogen oxides which contribute to smog
formation. According to the U.S. Environmental Protection Agency (EPA),
because diesel has a higher carbon content it also emits more carbon dioxide
per gallon of fuel consumed when compared to gasoline.3 The full sized
luxury cars are not needed because Uber can run their same rideshare
service with cars that are more environmentally friendly and increase profits
at the same time.
The main problem I see here lies within Ubers business model and ride
options. If the UberSUV and UberBlack both cost $3.75 per mile and UberX
3 The Tartan Carnegie Mellons Student Newspaper Feb 21, 2011 Newspaper
http://thetartan.org/2011/2/21/scitech/diesel

THE GROSSMAN CONSULTING FIRM

only costs $1.30 per mile, people are going to be more inclined to choose the
cheaper option. The ride costs for UberSUV and UberBlack are significantly
higher than the costs of UberX rides mainly because the rate of fuel
consumption is a lot higher causing the drivers to spend a lot more money
filling up at the pump. If Ubers fleet was strictly hybrid or electric vehicles,
fare costs would be a lot cheaper which would most like prompt more people
to use the service. If Uber can achieve the same level of high quality service
just by using hybrid or electric vehicles, their profits will definitely be seeing
an increase as drivers will be spending less time filling up at the pump and
more time on the road serving customers.
The clean air initiative The Grossman Consulting Firm is proposing to
Uber4 would be to switch out one full sized luxury car for one hybrid or
electric car every year until all cars in the Uber fleet are either hybrid or
electric cars. Rather than trying to target individuals and trying to get them
to switch to using a hybrid or electric vehicle, I think using the approach of
targeting a large well known ride share company will have a more profound
effect on the environment. Also instead of trying to swap out Ubers whole
fleet all at once, this graduated approach is a lot more feasible and cost
effective.

BACKGROUND AND NECESSITY

The corporate culture of Uber is quite interesting since Ubers headquarters
are based in SF and they have expanded globally. From my research, I have
found out that Uber is a great company to work for but it can be really
stressful at the same time. If you are going to work for Uber you must well
acquaint yourself with their lifestyle. You're expected to pitch in and do
whatever it takes to have your city succeed, no matter when or how long it
takes, and everyone hired is willing to do so.
According to Chip and Dan Heath, there are six principles that will help
make your ideas stickier or help make your pitch unforgettable. These six
4 Uber is a privately held ridesharing service founded in 2009 and is based in San
Francisco, CA. The company uses a smartphone app to connect passengers with
drivers of vehicles for hire. The customers us the app to request rides from their
current location. Ubers pricing is similar to metered taxis except all hiring and
payment is exclusively handled through Uber and not the driver. If the Uber car is
traveling at a speed greater than 11 mph, the price is calculated on a distance basis.
Otherwise, the price is just calculated on a time basis.
4

THE GROSSMAN CONSULTING FIRM

principles are Simple, Unexpected, Concrete, Credible, Emotional, and

Stories. Using just the first letter for each one of these principles spells out
the word success except it is missing the last s which is just added on. For
the purposes of this clean air initiative, I will be covering simplicity and
concreteness.
Simplicity
In the words of Chip and Dan Heath, To strip an idea down to its core, we
must be masters of exclusion. The Golden Rule is the ultimate mode of
simplicity: a one sentence statement so profound that an individual could
spend a lifetime learning to follow it (Heath & Heath 16). Ubers Clean Air
Initiative will be the definition of simple when trying to implement because
the one and only inherent challenge is generating enough revenue to be able
to afford a new or used hybrid/electric vehicle. If I were to condense my
proposal down to single sentence, it would be: Do what is right for the
environment by swapping out your gas guzzler for a hybrid or electric vehicle
today!
Concreteness
In the words of Chip and Dan Heath, We must explain our ideas in terms of
human actions, in terms of sensory information. Naturally sticky ideas are full
of concrete images because our brains are wired to remember concrete
data (Heath & Heath 17). Ideas need be communicated with concrete
images with actionable statements or how do you expect someone to
remember your idea. The image I wanted to paint in peoples heads would
look a little something like this:

COST ANALYSIS

THE GROSSMAN CONSULTING FIRM

UC Davis Electric Vehicle Explorer (Figure 1)5

Using the UC Davis Electric Vehicle Explorer tool, I generated a

projected annual gas budget if I were to commute from my house in Santa
Clara to San Francisco five days a week. The first two cars in (Figure 1)
represent the proposed new fleet of cars and the last two cars represent
current models of Ubers ride selections in which I think need to be replaced.
The Ford Explorer would represent the UberSUV and the Lincoln MKX would
represent the UberBlack. The reason I did not add a car from the UberX
category to this comparison chart was that I did not see an immediate need
for the removal of these vehicles since gas costs were relative similar to the
new fleet.
Hybrid
Electric
$4199-$1408 = $2,791
$4199-$809 =
$3,390
($2,791 + $3,390)/2 = $3,090.50
On average switching to either a hybrid or electric vehicle would save you
around $3,090.50 which is a lot of money if you look at the whole fleet. Since
Uber is a private company I could not find the exact number of how many
cars they have so I will use some projections.
1,000 projected drivers * $3,090.50 = $3,905,000
10,000 projected drivers *3,090.50 =$30,905,000
If just 1,000 non-hybrid vehicles are swapped out for hybrid or electric
vehicles it would save Uber roughly four million dollars. Since Uber is already
an international company, I increased the scope of the projection to 10,000
drivers, which would save Uber roughly 31 million dollars.
5 http://phev.ucdavis.edu/project/ev-explorer/
6

THE GROSSMAN CONSULTING FIRM

Uber Ride Options Breakdown

UberX
UberXL
Vehicle (New Fleet)
$1.30
$2.15
$3.75

UberBlack UberSUV
$3.75

Hybrid/Electric

$1-$1.30

*Prices per Mile

Referring to the prices per mile above, it definitely seems like the
UberBlack and UberSUV are significantly higher and we all know consumers
are always trying to save money in this day and age. These higher fare costs
definitely make sense because these cars typically consume gas at a higher
rate, but are they are they really necessary? $3.75 a mile seems pretty high
if you ask me.

Uber Fare Quote Projection (Figure 2)

I used the fare quote projection tool on Ubers website to project the prices
for a ride from SFO to my house in San Francisco and the results were quite
shocking to me at first. As a college student, I could never see myself paying
$70-$80 dollars for a 15 mile ride. The UberX alternative on the other hand is
a lot more reasonable but I think fares could be even lower if hybrid or
electric vehicles were introduced to the fleet. The UberX and UberXL vehicles
do not require immediate attention; however I think the UberBlack and
UberSUV need to go.

ASSESSMENT
6 https://www.uber.com/en-US/cities/san-francisco
7

THE GROSSMAN CONSULTING FIRM

U.S. Department of Energy Hybrid Comparison (Figure 3)7 Graph of Accumulated Savings
over Time (Figure 4)8

The cost of a new hybrid or electric vehicle can be $1,000 to $5,000

more than the typical gas powered vehicle, but after doing the math buying
a hybrid or electric vehicle is actually saving you more money in the long
run. I used the U.S. Department of Energys hybrid comparison tool to
compare a hybrid Prius and a non-hybrid Toyota Camry (Figure 3). You can
see that the hybrid vehicle is $1,230 more than the non-hybrid vehicle. This
would steer some people away from buying the hybrid vehicle, but not an
informed buyer who has done the math. The immediate or short turn return
for buying a hybrid vehicle is not very much but after graphing it out in
(Figure 4) we can see that your accumulated savings increase exponentially
as the months of ownership increase. One can save up almost $1,000 in gas
a year, so this would only take a little over a year to pay off the difference for
the hybrid version of a vehicle.

7 http://www.fueleconomy.gov/feg/hybridCompare.jsp
8 http://www.fueleconomy.gov/feg/hybridCompare.jsp
8

THE GROSSMAN CONSULTING FIRM

World EV/PHEV Sales (Millions/Year)* (Figure 5)9

Figure 5 shows a graph that is taken from the EV City Casebook 2012 created by the
Rocky Mountain Institute. This graph projects the number of plug-in hybrid vehicles
(PHEV) and electric vehicles (EV) sold until the year 2050.
27 million PHEVs and EVs are expected to be sold by 2020 and over one billion by
2050, which will hopefully reduce CO2 emissions by 10 gigatons (Gts) by the year
2050.

9 http://www.rmi.org/Content/Files/EV_City_Casebook_2012_1.2.pdf
9

THE GROSSMAN CONSULTING FIRM

CONCLUSION
In conclusion, I think that if this change is implemented it can have a
profound impact on Ubers profits as well as the environment. We have
designed this initiative in a very simple and cost effective manner so that it
would be very feasible for Uber to implement it.
The main problem I noticed with Uber was the UberBlack and UberSUV ride
options. The vehicles used in these select ride services consume gas at a lot
higher rate than a hybrid or electric vehicle which causes the price to shoot
up significantly. In addition to spending a lot more money refueling, the
vehicles used in these selected ride services are a lot worse for the
environment. If Uber wishes to live up to the words of their mission
statement by evolving the way the world moves they must always be
thinking about implementing sustainable and cost effective initiatives. In
light of the global warming crisis and wildly fluctuating gas prices due to
slowly depleting oil levels on Earth companies that have a large carbon
footprint should definitely be looking into sustainable initiative or soon all of
Earths resources will be depleted. This Clean Air Initiative would be a perfect
chance for Uber to show that they are one of the few companies leading the
sustainable frontier and care about the environment and well-being of the
people.
This Clean Air Initiative will not only help the environment but it will
also greatly increase Ubers profits. The reasoning behind this is that if Uber
drivers spend less time and money filling up their gas tanks during the day,
they can spend more time driving customers and making fares. Also, if fares
prices were reduced a lot more people would start using the service so no
matter which way you look at it, profit will inherently go up. If might take a
year or two to payback your costs but in the long run it is definitely well
worth it.
If you think about it, there arent really very many challenges at all
when you are trying to implement this initiative. This proposed change would
require Uber to buy a new hybrid or electric vehicle at the end of each year
and swap it out for a non-hybrid vehicle. A new 2015 Toyota Hybrid costs
$24,200 msrp and if Uber were to trade the old vehicle for money, they
would only be incurring a very small fee in relation to their total annual
profits.

10

THE GROSSMAN CONSULTING FIRM

My suggestions for moving forward with implementing this Clean Air

Initiative would be to start thinking about which cities you would like to
implement this change in. If you are not sure or do not trust us on the benefit
of this initiative, you could try this change out for only a select number of
cities. It will not take you very long to notice the inherit benefits that come
along with implementing this initiative, trust me!

APPENDIX
To:
From:
Date:
Subject:

Uber Employees
The Grossman Consulting Firm
11/11/2014
Ubers Clean Air Initiative

Over the past couple weeks, The Grossman Consulting Firm has been
working hard with Uber to develop the proposal for this new Clean Air
Initiative. Here in this memo, I will be describing this change to you and what
potential value it will bring to Uber.
The Problem
When Uber first started service in March 2009 the company only offered full
sized luxury cars for hire. In 2012, the company launched an UberX
program which made small to mid-size cars available for hire. The problem is
that the profit from the full sized luxury cars is significantly less than that of
cars in the UberX program because those cars are mostly likely consuming
two to three times the amount of gas. Some of these full sized luxury cars
are even using diesel engines which are a lot worse for the environment than
cars fueled by oil. The full sized luxury cars are not needed because Uber can
run their same rideshare service with cars that are more environmentally
friendly and increase profits at the same time.
The Proposed Change
The Clean Air Initiative The Grossman Consulting Firm is proposing to Uber
would be to switch out one full sized luxury car for one hybrid or electric car
every year until all cars in the Uber fleet are either hybrid or electric cars.
Also instead of trying to swap out Ubers whole fleet all at once, this
graduated approach is a lot more feasible and cost effective.
Potential Value of Proposed Change
This Clean Air Initiative is directly in accordance with the triple bottom line
and will directly help lower Ubers overall carbon footprint as well as increase
company profits. The reasoning behind this is that if Uber drivers spend less
11

THE GROSSMAN CONSULTING FIRM

time and money filling up their gas tanks during the day, they can spend
more time driving customers and making fares. Also, if fares prices were
reduced a lot more people would start using the service so no matter which
way you look at it, profit will inherently go up. Rather than trying to target
individuals and trying to get them to switch to using a hybrid or electric
vehicle, I think using the approach of targeting a large well known ride share
company will have a more profound effect on the environment.
How is it going to affect you, what should you expect?
With the implementation of this new Clean Air Initiative within Uber, you
shouldnt really expect too much of a change in your daily routine with the
exception driving a lot more hybrid or electric vehicles if you are one of our
drivers. I hope you can see the inherit benefit of this change. If you have
questions concerning this initiative please do not hesitate to contact the
Grossman Consulting Firm.

12