The taximeter of the future: South Korea seeks the right ride | Festina Lente - Your leading source of AI news | Turtles AI

The Bank of Korea proposes introducing a 10% or 1,000 won per ride fee to raise 2.3 trillion won over five years and finance the purchase and cancellation of taxi licenses to facilitate the introduction of autonomous taxis. The goal is to bridge the technological gap with the US and China and protect both consumers and taxi drivers in an inevitable transition.

Key points:

• 10% tax or 1,000 won per ride to create a 2.3 trillion won fund
• The plan would cover the purchase of taxi licenses using a similar approach to Australia’s
• South Korea currently lags behind the US and China in autonomous driving
• Aging drivers and regulatory barriers are holding back the industry’s transformation

The Bank of Korea recently presented a comprehensive plan to reform the South Korean taxi industry by introducing a sort of "collective capital" to be built with an additional 10% fee on the fare or a flat tax of 1,000 won per ride, to be used entirely for the acquisition and revocation of current taxi licenses, with the goal of raising approximately 2.3 trillion won over five years. The economic analysis contains a striking estimate: if 7,000 traditional taxis in Seoul were replaced by autonomous taxis, consumers would benefit from an additional annual value of approximately 160 billion won.

The calculation starts from the estimated cost of individual licenses, equal to approximately 120 million won each for approximately 49,074 taxi drivers in Seoul alone, a total in line with an estimated market value of around 5.89 trillion won. Inspired by the Australian model, which covers approximately 39% of the market value of licenses, the Central Bank suggests a similar but more modest fund, specifically aimed at the capital.

The political and economic rationale behind the plan is a clear admission of South Korea’s growing technological gap with the United States and China, where investments of over 14 trillion won have been made to train AI systems, collect data, and launch commercial autonomous taxi services. The global market for the sector is expected to grow from $3 billion in 2024 to approximately $190 billion by 2034, at an average annual growth rate of approximately 51%.

In Korea, regulatory restrictions banning services like Uber and Tada and maintaining a traditional taxi market share at around 94% (only 6% is in "cruising" mode) have stifled innovation and limited consumer offerings, hindering the entry of new drivers, especially young ones. The average age of taxi drivers is high—72% is over 60—and many avoid night shifts, reducing availability and flexibility.

Among complementary proposals, the Bank suggests simplifying the rules on the total number of taxi licenses, introducing compensatory mechanisms similar to the "burning" of purchased licenses, and offering guarantees or co-profit sharing systems to mitigate the impact on existing taxi drivers.

With a measured approach: supporting drivers as a resource, protecting technological potential, and avoiding destructive impacts on license values, as happened in New York after Uber’s arrival, with a 92% drop in average license prices between 2014 and 2020 and a wave of defaults by indebted taxi drivers, the plan aims to build a gradual and socially sustainable evolution.

This reflection is supported by current data and robust projections, which contextualize the operation within the broader journey toward a more modern, consumer-oriented, and technologically competitive taxi system.