California legalizes rental cars for ridesharing


Gov. Jerry Brown this week gave a small but significant boost to the ridesharing industry by signing A.B. 2763, which allows drivers for transportation network companies such as Uber and Lyft to use rented or leased vehicles while contracting with those firms.

The new law, which passed both houses of the Legislature by overwhelming majorities, does so by changing the definition of a “personal vehicle” in the state’s Public Utility Code to include vehicles rented or leased for fewer than 30 days.

This is an important technical change. As some TNC companies, business groups and advocates for the electric-vehicle industry argued in a May letter supporting the measure, AB 2763 allows individuals who don’t own a car to become ridesharing drivers. The group also argues the new law will promote the use of electric vehicles:

Short-term rentals for TNC drivers represent a promising way to familiarize drivers with electric vehicles (EVs) and leverage the growth of TNCs to get more EVs on the road, which could substantially reduce criteria air pollutants and greenhouse gas emissions.

The bill was authored by Assemblyman Mike Gatto, D-Los Angeles, who specializes in bills that offer tangible fixes to real-world problems. This law certainly fits that definition. According to the Assembly bill analysis, the California Public Utilities Commission already had been considering whether to allow TNC drivers to use rented vehicles, so the new law “could be perceived as simply providing legislative guidance in the existing proceeding.”

Ridesharing company Lyft also issued a statement of support Wednesday:

Lyft applauds Governor Brown’s decision to sign AB 2763 and ensure that all Californians – including those who can’t afford to own a car – can participate in the new economic opportunities created by ridesharing.

The new law is the latest example of the inroads TNC companies are making in California, which is known for its often heavy-handed approach to business regulation. As the Los Angeles Times’ Liam Dillon wrote in August:

Ride-hailing companies have scored notable successes at the Capitol in recent months as they’ve attracted both business-aligned Republicans and tech-friendly Democrats.

That’s encouraging news.

Photo by Dima Sidelnikov /


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