Tesla Model 3 electric vehicle in place of a Hertz airport.
Photo by ER Davidson
not long after Hertz Global Holdings Emerging from bankruptcy last summer, the Estero, Florida-based company boldly reorganized the entire car rental industry following the COVID-19 pandemic. $4.2 billion deal announced To buy 100,000 Tesla fully electric vehicles (EVs) by the end of 2022. Just like that, the race was on within the industry to transition from the internal combustion engine (ICE) model to the EV.
While Hertz was before the initial blocks, its two biggest rivals, Enterprise Holdings and Avis Budget Group, have since joined. But as full-scale adoption of EVs among American drivers is about to take years, the rental car shift will also be a marathon, not a sprint. “Companies that operate fleets our size can’t just turn a dime and run all EVs next year,” said Sharkey Laguana, president of the American Car Rental Association. “Our industry wants to grow as fast as we can, but there are some serious and challenging obstacles.”
The initial one, Laguana said, “is just getting your hands on the damn things.”
The $56 billion U.S. rental industry typically buys a tenth of auto makers’ new cars each year, but frequent supply-chain disruptions, especially with shortages of essential computer chips, have slashed that number. The industry bought 2.1 million vehicles from OEMs in 2019, Laguana said, compared to just 750,000 in 2021. US sales of EVs doubled in 2021, but still comprise only about 4% of the country’s total market for cars and trucks.
Another major speed bump for rental car companies is the lack of EV charging stations at airports and other rental locations, hotels, resorts and office buildings, as well as on local roads and interstate highways. And then there’s the challenge of educating and training companies’ agents and mechanics on EVs, not to mention familiarizing drivers on the differences from operating ICE vehicles.
Hertz doesn’t state the total number of vehicles in its fleet, said Jeff Niemann, senior vice president, operations initiatives, so it’s unknown how many Teslas are currently available in the more than 30 markets that offer EVs, including the first one now. Includes 65,000 Polestar 2s — an EV brand jointly owned by Volvo and its Chinese parent Gheely, which plans to go public through the SPAC deal — that Hertz began buying into one five year deal Announced in April. Niemann said, however, that he is confident that EVs “will represent more than 30% of our fleet by the end of 2024.”
Meanwhile, Hertz has several million ICE models in the US that will be rented for years to come, said Chris Voronka, an analyst at Deutsche Bank. Still, “they have decided that they are carrying the EV torch for the industry and have been very clear about their plans and goals,” he said.
Watch nothing but the Hertz TV spot starring NFL superstar Tom Brady about Tesla rentals that aired during this year’s Super Bowl. Hertz has also created a dedicated area on its website to help educate drivers about EVs.
According to Voronka, Hertz’s primary target is the corporate market. “Leisure customers may think driving an electric car is cool, but the long game is on the corporate side,” he said.
Beyond comparing the cost of employees driving EVs versus ICE cars — currently skewed by the national average of about $5 for a gallon of regular gas — companies are looking to reduce their greenhouse gas (GHG) emissions to EVs, net-zero. Strengthen your Environmental, Social and Governance (ESG) among sustainability investors and advocacy groups that see it as a quantitative way to meet goals.
“Preliminary research has shown that corporate accounts are willing to pay a premium for EVs, as it helps them achieve some of their ESG objectives,” Voronka said.
Not surprisingly, rental companies are embracing the concept themselves, said Sarah Forney, director of Clean Vehicles for the non-profit Corporate Electric Vehicle Coalition (CEVA). While they certainly want to “get more butt in EV seats,” she said, “they also want to meet their sustainability goals and greenhouse gas emissions reduction targets.”
Siemens US, an affiliate of the German-based conglomerate, is a major member of CEVA and was part of the launch of the Hertz EV programme. “We fully support our global decarbonization and ESG targets,” said Randall Echterberg, Travel Commodities Manager for North America, “and our fleet makes up the largest Scope 1 emissions footprint and we are already on an aggressive EV transition. We are making progress with strategy,” referring to the GHG produced by Siemens’ US fleet of approximately 10,000 vehicles. “On the corporate travel side, we want to expand our employees’ use of EVs.”
To date, Siemens has booked over 100 EV rentals with Hertz. “We’re not pushing as hard as we’d like, because they’re not ready,” said Hitterberg, acknowledging the inherent constraints in their EV rollout. Siemens is clearing one hurdle: It builds EV charging stations and is committed to building a million of them in the US over the next three years.
Enterprise may not be as out-front with its EV rental program as Hertz, but the privately held company, headquartered in St. Louis, has been in the exploration phase since 2014. this is the year he started participating Drive Electric Orlando Rental PilotA multi-year study sponsored by the Electrification Coalition, a Washington, DC-based non-profit that advocates for EV adoption, particularly among fleet owners.
The pilot, partially funded by the US Department of Energy, focused on Orlando International Airport as well as resorts and theme parks in the area. “We also had close partnerships with local regulators and policymakers, which was critical in making sure we did it the right way,” said Chris Hafenrefer, vice president of strategy development at Enterprise. The company rented all-electric cars, including Chevy Volts and Nissan Leafs, to commuters who were encouraged with benefits such as free charging, parking and valet service.
“Even if EVs were [then] An afterthought in our business, the lessons learned are in line with what we see today. Namely, it’s important to get employees behind the wheel of EVs, “so they can actively communicate with customers,” as is partnering with other entities to invest in charging infrastructure.
Although rental companies have said they are building their own charging stations, another key partner is the US government, which in last year’s bipartisan infrastructure bill gave states $7.5 billion to build a network of EV charging stations. provision was made. Earlier this month, the Biden administration proposed rules that would require interstate stations with federal dollars to be no more than 50 miles apart.
Enterprise, such as Hertz, is focusing on its commercial-rental fleet and fleet-management division, where business customers will value lower maintenance and operating costs. “It’s about being a trusted advisor to those clients, helping them understand how to operate EVs and the benefits,” Hafenrefer said. But with leisure travel renters, figuring out how to get from point A to point B and how to charge the car is increasingly challenging, Hafenrefer said.
Parsippany, New Jersey-based Avis saw its stock rocket in early November when it said it was getting into the EV rental business a week after the Hertz-Tesla deal, and though it backed out with the market as a whole, CEO Joe Ferraro told analysts during a conference call at the time, “You’ll see that we’ll be more proactive in power scenarios going forward as the situation develops.”
Avis has since remained silent and declined to comment for this article. But Voronka said, “I take them at their word.” He cited the risk of the rental car company’s large corporate fleet as a reason. “They are not ready to cover up what they are doing now,” he said.
American automakers are spending billions to ramp up their EV production. General Motors The goal is to have 400,000 EVs delivered in North America by the end of 2023, and Ford has committed to 600,000 by the same time. Given that EV rental is essentially an extended test drive, the rental market is seen as an important driver. President Joe Biden’s Plan Half of all new cars and trucks sold in 2030 will be zero-emissions vehicles.
“From our perspective, the rental car market makes a lot of sense, especially as OEMs get into long-distance electric vehicles,” said Ben Prochazka, executive director of the Electrification Coalition. “What a great way to expose consumers to new technology in a low-risk setting.”