Weekly Brief: EV Leg-Up in Europe But US Gives Gig Working a Kicking

The demand for electric vehicles may be iffy and the environmental benefits may be questionable.

However, one thing is certain – the e-mobility revolution is happening, ready or not. One jaunt through this year’s 2019 Frankfurt Motor Show (IAA) made that clear. The exhibition hall in Frankfurt is so large and packed with so many debuts from so many automakers that picking out a prevailing trend is often hard to do. Not in 2019, when almost every automaker in attendance either unveiled a new production-ready electric vehicle or teased a pure-electric concept.

Take for instance Volkswagen, which debuted its first fully electric vehicle, the VW ID.3. Then there was Skoda, which introduced its all new EV, the Citigo-e iV. Honda launched its first fully electric crossover, the Honda e, the EV star of the show was the BMW 4 Concept, a near production ready car soon to be the BMW i4, and Byton, a start-up out of China, unveiled its all-electric, production-ready SUV, which has a front screen so large that it calls to mind a movie theater. Volvo became the only mass-market automaker to offer a plug-in hybrid electric vehicle option across its entire range and Mercedes-Benz and Hyundai showed off cool electric concept cars, although our Phil Oakley argued that their lack of production-ready EVs made it feel like they were falling behind the game.

The rush toward EVs is as much about fear as it is about enthusiasm. Starting in 2020, new emission targets take effect in Europe that will lower the amount that a new passenger car can pollute to no more than 95g/kms of CO2. The good news for the auto industry is that it can offset its gas guzzlers with EVs, so long as it has EVs in production and people are actually buying them. Hence all the pomp in Frankfurt.

Meanwhile halfway across the world, a group of lawmakers sat in a room in Sacramento, California, and passed a bill that could upend the gig economy as much as the emission targets have the automobile industry. The new bill, called AB5, makes it harder for companies in California to classify their employees as independent contractors, rather than as employees.

To date, the likes of Uber and Lyft have been able to call their drivers contractors because gig drivers set their own schedules and enjoy the flexibility to work whenever they want, if they want to work at all. As a result, ride-hailing companies get to skip out on paying a suite of employee-related expenses, from minimum wage salaries to healthcare benefits to workers’ comp and unemployment.

The new bill aims to make this impossible. It redefines an independent contractor as only someone who A) runs an independent business; B) executes work that is outside of that company’s usual course of business; and C) can complete the job with total independence. If anyone fails any of these ABC credentials, he or she is deemed an employee, not a contractor, and that presumably would include Uber and Lyft drivers, as well as food delivery drivers for gig companies like DoorDash.

Governor Gavin Newsom is expected to sign the bill into law shortly and it would go into effect in January 2020. When it does, it would create more than a million new employees in California and could cost Lyft and Uber almost a billion dollars in new expenses per year respectively. Not great news for companies that are already losing hundreds of millions of dollars a month.

Uber, for one says, it’s not sweating it. The company plans to argue that its drivers are not performing a task that’s central to its business. Instead, they’re performing a task that’s central to their business, as ride-hailing drivers. Uber’s business meanwhile is just a technology platform that connects ride-hailing drivers and passengers. “Just because the test is hard doesn’t mean we will not be able to pass it,” one of the company’s lawyers boasted last week.

If you find this logic a wee bit convoluted, you’re not alone. Most analysts expect Uber to lose their legal battle if the bill is signed into law. They also expect other states to follow in California’s footsteps, which would force Lyft, Uber and every other company in the gig economy to drastically reconsider how they run their businesses.