Could a London taxi badge eventually be worth more than a New York taxi medallion when robo-taxis arrive?

As the taxi industry tip-toes towards a new era of automation, there is growing speculation over the future value of traditional taxi licences. Whilst a London taxi badge currently holds no monetary value to the licensee, as fully automated cabs take hold of the trade in years ahead, could it surpass the iconic New York taxi medallion in value?

To operate a licensed taxi in London, drivers must earn their green badge by passing ‘The Knowledge’. This involves memorising thousands of routes and landmarks across the capital, a process that takes years to master. Candidates undergo a series of exams, proving they can efficiently navigate the city’s maze of streets. Upon successful completion, they are awarded a licence to operate a black cab, joining an elite group of drivers and effectively earning themselves a job for life.

Across the Atlantic, New York’s system is quite different. The right to operate a yellow taxi is tied to a medallion, which has historically been bought and sold on the open market. These medallions were once extremely valuable, peaking at over $1 million in the early 2000s. However, with the rise of ridesharing apps like Uber and Lyft, demand for medallions dropped sharply, and their value crashed.

With fully autonomous vehicles on the horizon, which may still be decades down the road, the taxi industry could face another major disruption. Robo-taxis, once fully operational, could make traditional manual driving redundant. As this shift occurs, authorities may limit the number of autonomous taxi licences to control congestion and prevent an oversupply of vehicles on the roads. An uncontrolled increase in robo-taxis would not only lead to congestion but also increase the demand for parking and vehicle maintenance infrastructure.

In this new era, drivers may still retain the right to renew a taxi licence, but this time operate it without them in the driving seat. It would effectively allow them to run a self-driving taxi service. The value of these licences would likely be tied to the potential earnings of a fully operational autonomous taxi, capable of working 24 hours a day, seven days a week. Some drivers might choose to hold onto their licences, generating a passive income from their autonomous fleet. Others may opt to sell the licence outright, much like the New York medallion system.

Although fully autonomous vehicles are still some years away, there is growing interest in the potential value of taxi licences in the future and how the switch from the current licensing regime will happen. For those considering leaving the industry, holding onto a licence could be a lucrative investment. While it's hard to predict when or how the shift will happen, retaining a taxi licence could prove to be a smart long-term financial decision.