California DMV Reconsiders Commercial License Plates for Uber, Lyft and Sidecar

25 Jan 2015 | Author: | No comments yet »

California DMV changes course, reverses registration policy change for rideshare drivers.

SACRAMENTO, Calif. (AP) – The California Department of Motor Vehicles retracted on Saturday an advisory requiring anyone who transports people for money to commercially register their vehicles. Earlier this month, some UberX drivers in Calfornia found themselves between a rock and a hard place: The state started requiring ridesharing service drivers to register their cars as commercial vehicles, but Uber in turn suspended some drivers who did just that.California has retracted a notice that said private drivers for ride-sharing companies such as Uber Technologies Inc. and Lyft Inc. must have a commercial license plate or risk getting a citation.

The Sacramento Bee reports ( ) the DMV’s move came amid an outcry by rideshare companies who said such a requirement would threaten their business, and by state lawmakers who said the department was applying outdated rules to a new kind of business. “We jumped the gun, and we shouldn’t have,” DMV director Jean Shiomoto said in a statement. “The matter requires further review and analysis, which the department is undertaking immediately.” Ride-for-hire companies Uber and Lyft had argued that lawmakers and the California Public Utilities Commission already recognized their “transportation network business” as distinct from other commercial transportation businesses, such as taxicabs. Those companies allow nonprofessionals to drive customers for money, and they rest on the premise that anyone can make extra money off their personal vehicle.

Republican and Democratic lawmakers accused the DMV of applying an antiquated rule to a business model that could hardly have been anticipated when the relevant statute was written in 1935. According to the report, DMV officials “will meet with regulators and the industry to work through the issue,” presumably to develop a policy that all sides can agree to.

We suspect these Uber contractors’ driving privileges will be restored fairly quickly, however; though Uber isn’t saying a lot about the issue, the company sent a statement over to Gizmodo suggesting that this deactivation shouldn’t have happened. “How a driver registers his/her vehicle is up to that driver. Some analysts had predicted the business implications, including requirements like commercial insurance, could be a game-changer for the embattled rideshare industry. But according to BuzzFeed, UberX drivers who complied with the DMV’s policy found themselves running afoul of Uber’s own policies, which state that UberX drivers need to have a non-commercial auto registration. Uber does not require a driver to register his/her vehicle as personal, and it is not our policy to deactivate a driver for registering his/her vehicle as commercial,” said statement reads. “We are showing your vehicle registration is actually a commercial vehicle registration. Jerry Brown a bill that required more robust insurance requirements on drivers working for “transportation network companies.” That law acknowledged the legality of such transactions, industry representatives said.

Lawsuits against Uber, Lyft and other car-booking companies have mounted this year as they seek to crack open the U.S. taxi and limousine market, estimated by IbisWorld Research to be an $11 billion industry. If Uber drivers are required to obtain commercial auto insurance, it could increase costs, because that coverage is more expensive than the personal insurance many ride-share drivers now carry. Representatives of the rideshare groups told The Times on Friday that they didn’t believe commercial plates should be required for part-time and occasional ridesharing drivers. So why, then, are Uber drivers even switching from personal to commercial vehicle registration—especially since it costs more, and typically requires much pricier commercial insurance for the vehicle itself? Under the law, ride-share companies operating in the state must provide at least US$200,000 (S$268,920) of insurance when a driver is on duty and US$1 million of coverage when the driver has picked up a customer.

However, there remains uncertainty about the interaction and effect of this law governing vehicle registration requirements with the more recent regulatory and statutory changes affecting ride share operators.

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