Téo Taxi vs Uber: Montréal’s Local Threat to Uber

Montréal, Québec, has a relatively new entrant into the taxi industry. Téo Taxi combines an environmental focus with the ease of app-based dispatch and billing to create a powerful hybrid company.

While visiting Montréal in June, I decided to give it a try.

The service has three key features:

  • every car in the fleet is electric;
  • every ride is hailed and billed through a mobile app;
  • every driver is an employee of the company.

Montréal’s Taxi Startup

Québecois have always cultivated a strong sense of independence. Téo Taxi could capitalize on the strong cultural identity in its competition with the brash foreign invader, Uber, which in June was granted a 90 day evaluation period.

The drivers are employees of Taxelco, Inc., a startup owned by XPND Capital, a Montréal investment firm headed by Alexandre Taillefer. Taillefer. Taillefer is himself a Montréal-made-millionaire. He guided a small website design company to significant growth. Taillefer now heads an investment firm, XPND Capital which is the main investor in Téo Taxi’s parent, Talexico.

He is also an entrepreneurial celebrity. From 2013-2015, Alexander Taillefer appeared on three seasons (2-4) of Dans l’œil du dragon (“In the Eye of the Dragon”), the French language version of Dragons’ Den/Shark Tank, produced in Québec.

Through Dans l’œil, he invested in a chain of poutine restaurants. (If you don’t know poutine, then you don’t know Québec.)

Taillefer started Téo Taxi with a sense of social conscience. The fleet consists of electric vehicles, and he pays drivers $15/hour, which, though not extravagant, is well above the $10.55 minimum wage.

If he rejected the Uber business model in setting up his taxi company, Taillefer also openly rejected the way Uber operates. As reported in the Toronto Star, Alexandre Taillefer said, “I would never start a business the way Uber has, which is to attack regulations in every city and really mock democracy. It’s savage capitalism.”

Téo’s Green Business Model

The map of Montréal shows green Téo cars. Dragging the pick-up spot shows an estimated arrival of the nearest taxi.
The Téo app will look familiar to those who have used ride-hailing apps like Uber or Lyft.

‘Téo’ is an acronym from three French words: transport écologique optomisé. The Téo Taxi uses only electric cars in its fleet, including Nissan Leaf, Kia Soul, and Tesla models. To drive their point home (ha, ha), the cars are green and white.

The fleet of fifty electric cars carries full commercial insurance and is fully licensed by the province of Québec. The company charges the standard taxi rate set by the province and the city, currently $3.45 fee, and $1.70 per kilometer and $0.63 per minute of operation.

Téo Taxi vs. Uber

Comparison of the start up Montréal taxi company and the American unicorn.
 Téo TaxiUber Technologies, Inc.
Company typeTaxi CompanyTransportation Network Company
DriversProfessionally licensed cabbies; hired as employeesDriving own car, or a car they rent/lease; signed on as independent contractors
Car OwnershipTaxi companyDriver owned/rented/leased
Car TypeElectricVaries, primarily gas
CostGovernment regulated taxi fare. Does not increase during peak demand.

$3.45 base + $1.70/km + $0.63/min.
Generally cheaper, but frequent surge pricing quickly erases that advantage.

$3.50 base*+ $0.85/km + $0.20/min.
DispatchMobile appMobile app
HeadquartersMontréal, QuébecSan Francisco, California
TaxesCollectedNot collected.
Areas ServedMontréal, with plans for Québec City and Toronto in 2017Hundreds of cities in dozens of countries.

Téo Test Ride

While on a recent trip to Montréal, my wife and I took and Uber to breakfast. For comparison, we hailed a Téo for the ride back.

The process of hailing the car is similar to most other ride hailing apps (Uber, Lyft, etc.)

I previously had downloaded the app and connected it to my credit card.

Téo app looks for a cab.
The Téo app pre-authorizes the credit card you have on file before it matches you with a car.

Steps outside the restaurant (Maison Publique. It has an awesome brunch. They open at 10:30. Get there early; there’s a line), I put in where we wanted to be picked up and where we were going. The app searched for the nearest available car.

Everything went well. The nearest car was only 2 minutes away.

Once booked, the app included a photo of the driver and his vehicle. Taking a cue from Lyft, perhaps, the app also told us a few profession and personal facts about the driver. It told us he was an experienced cab driver. It also shared his musical preferences and his favorite vacation spot.

He confirmed that he had worked many years for other companies, and seemed committed to the all electric car fleet of green cars.

My wife and I are English only, like too-many traveling Americans. Our driver spoke perfectly accented English. He was a wonderful ambassador to Montréal: polite, engaging and knowledgable.

Téo app announces that a car and driver are 'en route.'
The driver is ‘en route.’ Scrolling the green tab at the bottom reveals a photo of the driver and the car.

For instance, he knew the city is having such an extraordinary amount of road construction done because next year Montréal will celebrate its 375th anniversary. Earlier in out trip, we had an Uber driver who didn’t speak English well and who didn’t know Montréal very well. He said, “Next year will be the 200th or 2000th year for Montréal.”

Our trip was kinda short, and I was rather chatty, so I did not get a chance to test the wifi connection that is supposed to be in every Téo.

After we get out, I get to rate the driver on a scale of one to five stars.

The total cost is $12.71, exactly 10 cents lower than our earlier Uber trip, but the Uber trip was under 1.8x surge, which added $5.25 to the bill.

Compare the receipts and notice a couple of other things.

Tax and Tip vs The Surge

Base fare and booking fee for Uber come to $7.56; Téo’s subtotal is $9.61, almost 25% higher.

Téo also includes a tip, set to the default of 15% (When Uber sets its tips for taxicab drivers in Toronto, Ontario, and major US cities, it sets the default to 20%, but it refuses to allow in-app tipping four its driver-“partners.”).

But notice that Téo includes two different provincial taxes:

TVP (Taxe de Vente du Québec, or sales tax) and

TPS (Taxe sure let Produits en Services; tax on products and services).

Uber rides are a self-proclaimed tax-free zone.
The Uber receipt shows the surge pricing, but no taxes.
Téo Taxi receipt showing the taxes collected.
The mandated rate of Téo Taxi matches the rates of other cabs in Montreal. It’s generally higher than Uber’s rate. Téo also collects provincial taxes.

Lack of taxes paid has been a sticking point in Uber’s negotiations with Québec. To hear Members of Parliament discuss it, the whole affair sounds like a movie.

During a May 2016 raid by Revenu Québec agents armed with warrants, officials allege that Uber attempted to remotely erase data stored on the Canadian servers.

Citing the raid and a recent court ruling against Uber, MP Martine Ouellet said, “Uber is a corporate citizen thug that does not pay its taxes in Québec….”

There was an outcry (the record does not indicate supportive or oppositional).

She continued, “Thug. Rogue corporate citizen that does not pay its taxes.”

(Of course, she said it in French: “Uber est un citoyen corporatif voyou qui ne paie pas ses taxes au Québec…Voyou. Citoyen corporatif voyou qui ne paie pas ses taxes.”)

The Future for Téo

If Montréalers purchase rides based on price alone, Téo Taxi and other cab companies will have a difficult time competing with Uber.

But if Montréalers respond to the homegrown upstart with a clear sense of social and global responsibility, then Téo can separate itself from the other cab companies and from Uber.

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