A sign saying "no to illegal taxis" is seen on top of a taxi taking part in protest against Uber earlier this year in Montreal. Christinne Muschi/Reuters

A company with an all-electric fleet of cabs and 40 percent of all medallions in the city is a beacon of light for Montreal’s taxi business.

Like many cities, Montreal has been trying to drag the city’s taxi industry, at times kicking and screaming, into the 21st century. Many of the new municipal and provincial taxi rules made in the past two years—a business-casual dress code, accepting card payments, security cameras and background checks—have been met with drivers’ resistance, even as Uber creeps onto their turf.

Emboldened by Quebec’s storied and influential pro-union environment, Montreal’s taxi lobby has been strong and incredibly vocal in its hatred of Uber since the ride-hailing service first arrived in 2014. On top of holding regular protests, some Montreal cabbies have even roamed the streets in vigilante sting operations, at times even aggressively confronting Uber drivers and passengers. Mayor Denis Coderre has repeatedly expressed his disdain for Uber and the city’s taxi bureau has seized 679 UberX cars in 2016 alone.

Despite population growth and declining private-car use, the medallion quota in Montreal has been stalled at 4,431 since the end of the 1980s, according to the province’s Transport Commission. That closed market makes medallions scarce, leading to the creation of a secondary market secondary market where owners sell their medallions to the highest bidder. Often, they don't sell them back to the city but rather put them up for sale on a craigslist-style board and sell to other people for upwards of $200,000. The lack of outside competition naturally led taxi drivers to become a government-protected class. It also allowed fares to creep up, making Montreal a prime target for cheaper disruptors like Uber.

The Competition Bureau of Canada has come out in favor of letting more players into the taxi business. “Traditional taxis, [transportation network companies] and other new business models that may emerge should be subject to a level playing field, so that all participants in the industry have the opportunity to compete vigorously,” the Bureau wrote in its 2015 paper, Modernizing Regulation in the Canadian Taxi Industry.

Leveling the playing field could require burning it all down first. Legalizing Uber would dilute medallions’ value, making the government vulnerable to litigation unless it buys all the medallions back. Doing so would cost as much as $1.7 billion (CDN), and that’s not counting the cost of writing and implementing new legislation (Quebec attempted to write a more comprehensive law in the spring). A partial buy-back is under consideration, but for all intents and purposes, the city and province—not unlike other heavily regulated  jurisdictions—have a vested interest in protecting the taxi industry. “If they want an open market, then they have to ensure the security of the drivers who made the investment,” says Benoit Jugand, the spokesperson for Montreal’s taxi association.

But Montreal’s archaic taxicab system is getting a boost after Taxelco, the parent company of an app-based taxi upstart backed by major investors, bought out its biggest competition in August. Now owning almost 40 percent of all medallions in the city, Taxelco and its flagship all-electric fleet, Téo Taxi, are a beacon of light for others struggling to protect and modernize local cabs under the weight of ride-hailing heavyweight Uber.

“We want to create a critical mass of good taxis. Our goal is very clear: We want to offer a nice cab anywhere on the island of Montreal in five minutes,” says Taxelco president and CEO Marc Petit.

And it’s not done building its empire yet: Taxelco intends to expand to several other Canadian cities including Toronto and Vancouver, and is also cautiously speculating on parts of the U.S. market. Petit says the company is also looking at offering electric bike-sharing, trucks, and school and city buses, as well.

Téo Taxi began beta-testing its app in Montreal in November 2015, rolling out the service to the general public in March of this year. The all-electric (EV) fleet—stocked with Kia Souls, Nissan Leafs and Model S Teslas—will count 120 zero-emission cabs by autumn.

Téo Taxi customers order cabs via a smartphone app similar to Uber’s, and are greeted by name by friendly, uniformed drivers. The cabs themselves have a unified green-and-white color scheme and are outfitted with free wi-fi, the option of playing personalized music, and a touchscreen in the back seat that displays the route and metered fare.

It’s remarkably different from Montreal’s typical cab experience—usually a lived-in sedan blasting talk radio and smelling of stale coffee. Petit says Téo was designed to offer a more predictable service. But extending that predictability to its newest acquisition, the 94-year-old Diamond Taxi, could require some serious wheel-greasing. Téo’s drivers are salaried, full-time employees earning $15 an hour with paid vacation and benefits. However, most of the city’s 10,000 or so cabbies are considered independent contractors—drivers who typically rent access to medallion cabs and then work long hours to maximize profits.

Petit says Taxelco will offer jobs but also maintain the independent-contractor model for drivers coming over from Diamond. “We heard loud and clear from the driver population that not everyone wants to be a salaried driver,” he says.

Drivers who choose to remain independent contractors drivers also won’t be obligated to drive an electric car, although Petit says the company will offer strong incentives to drivers to rent hybrids and EVs from them rather than from private medallion owners. “The plan is to gradually replace when the cars come to their natural end of life,” Petit says. (Quebec is currently in the process of developing an electric-car charging network, but Petit says it isn’t extensive enough yet to support 1,720 fully electric cabs right now.)

Jugand takes Téo’s Diamond acquisition as a good sign. “If [Taxelco founder Alexandre Taillefer] invests in the taxi industry, it means there’s a future in the taxi industry that maybe wasn’t there last year,” he says.

Taxelco's Téo model bridges the modernization gap with fewer barriers to entry, nicer cars, fairer wages, and the same kind of tech-first approach that has helped make Uber so popular—all while enjoying the same market protections cabbies do. Petit of Taxelco says Téo’s platform currently has 70,000 registered users.

Whether Téo’s model can be replicated elsewhere and compete against cheaper ride-hailing apps in the long term remains to be seen, but both Petit and Jugand say they’re cautiously optimistic. "Téo is the way of the future. We seem to be the only ones caring about what’s happening in the car," Petit says.

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