Téo Taxi, Montreal’s all-electric, app-based taxi service announced that it will cease operations.  The parent company, Taxelco is also under suspicion of placing itself under protection of the Bankruptcy and Insolvency Act. 

 Despite sizable provincial grants and several rounds of funding from investment firms, Téo Taxi seems to have underestimated its many economic pressures.

The app-based transportation service differentiated itself from competitors like Uber, with its fleet of electric vehicles coupled with fair treatment of its drivers. However, it seems to have failed in a platform-based market.

 The current app-based transportation market is highly cost-conscious which left Téo’s cost structure at a considerable disadvantage. The government regulated Taxi service was paying its 450-500 unionized workers a fixed rate of $15 an hour, which lost Teo money during off-peak periods unlike its rival. Uber pays drivers only for actual trips and employs dynamic pricing, allowing it to charge higher rates during peak periods.

 Téo also underestimated the idling time of its electric vehicles, which require charging for several hours per day. Dominic Bécotte, a co-founder of Téo’s parent company, Taxelco had said the problems with its electric vehicles were even greater in winter months due to charging requirements. Despite reports the company would restructure, Bécotte said Téo will cease to exist and not live on in any other form.

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