Why, with or without Uber, Vancouver’s taxi industry is doomed
Home of Canada's most expensive cab licences, Vancouver will see its plate prices fall the farthest of all—with or without Uber
December 14, 2015
The ongoing Uber wars flared up last week in Toronto, where taxi drivers took to the streets in protest by clogging downtown traffic in a display that was perhaps ironic given the day (and night) jobs of the protesters. They directed most of their anger at UberX, the company’s lower-cost option, which many cab drivers say is skirting regulations and killing their industry (and their ability to earn a living in it) in the process. One driver, a self-proclaimed 22-year industry veteran, even ran up to an UberX driver and clung to the mirror as the car drove away. Why are they so desperate? Consider the price of a Toronto licence in 2012 vs. 2014. Over those two years, the estimated value of a taxi plate in that city dropped from $360,000 to less than $100,000. Much of that had to do with Toronto changing the way cab licences worked, but Uber, not surprisingly, has received the bulk of the blame.
Vancouver doesn’t have Uber yet, though that could change. While the service remains banned, the city is looking for a solution it believes palatable for every player involved, particularly cab companies. A Vancouver taxi licence went for $800,000 in 2014, a price that’s now dropping because of the mere threat of Uber according to the Vancouver Taxi Association’s Carolyn Bauer. Yes, $800,000, a price tag far beyond anything ever seen in Toronto. It’s nearly what they’re worth in New York, in fact, and substantially higher than any other city in Canada. Over-regulation has led to too few cabs on the road, but it’s also why the value of a taxi licence in this city has so far to fall. And make no mistake—it will fall.
That’s because while Uber may be in some minds public enemy number one, the company is just the most visible manifestation of impending and unstoppable change that is buffeting the industry. There are other reasons, after all, why the value of Vancouver’s taxi licences might be in decline. Car2Go, a taxi alternative, doubled its fleet size this past summer, while BCAA’s version, Evo, launched months earlier. And while self-driving cars might still be a decade or so away from replacing human-driven taxis, the threat they present to the industry’s business model—and Uber’s, too, for that matter—is clear and inescapable. According to Peter Nowak, a Toronto-based technology journalist who’s written about the way automation will change how people work in his book Humans 3.0, “the protests over Uber are small potatoes compared to what’s coming next. Self-driving cars are going to inevitably change absolutely everything about driving,” he says. “If taxi drivers think UberX drivers are eating away at their livelihood, they haven’t seen anything yet.”
The writing, in other words, is on the wall. When that happens, and when an industry is viewed as having a clearly limited shelf life, the value assigned to those who are still in it begins to plummet. This is Business 101. It’s happening with fossil fuels. It happened with once-great companies like Eastman Kodak and Xerox. And it’s happening with the taxi industry. As for Vancouver, home of Canada’s costliest cab licences—well, just ask Icarus how rough the landing was.