Business

How the big EV transition is starting in the car rental industry

Tesla Model 3 electric vehicle at a location at Hertz airport.

ER Davidson’s photo

Not long after Hertz Global Holdings emerging from bankruptcy last summer, reorganized after the Covid-19 pandemic stalled the entire car rental industry, the Estero, Florida-based company boldly announced a $4.2 billion deal to buy 100,000 Tesla all-electric vehicles (EVs) by the end of 2022. Just like that, the race is on in the industry to transition to EVs from internal combustion engine (ICE) models.

While Hertz came out of the startup block for the first time, its two biggest rivals, Enterprise Holdings and Avis . budget team, since joining. But just as large-scale adoption of electric vehicles by American drivers will take years, so renting a car will be a marathon, not a sprint. “Companies that operate fleets of our size can’t spend a dime and next year use all of the EV rides,” said Sharky Laguana, president of the American Car Rental Association. . “Our industry wants to grow as quickly as possible, but there are some serious limitations and challenges.”

The first thing, Laguana says, “is just getting your hands on the damn stuff.”

The US$56 billion rental industry typically buys about a tenth of new cars from automakers each year, but with persistent supply chain disruptions, especially chip shortages, essential computer, this number is decreasing. The industry bought 2.1 million vehicles from OEMs in 2019, says Laguana, compared with just about 750,000 in 2021. Electric vehicle sales in the U.S. will double in 2021, but still account for only about 750,000. 4% of the country’s total car and truck market.

Another major speed increase for car rental companies is the shutdown of electric vehicle charging stations, at airports and other rental locations, hotels, resorts and office buildings. rooms, as well as along local roads and interstate highways. And then there’s the challenge of educating and training company dealers and mechanics about electric vehicles, not to mention familiarizing drivers with the differences from operating an ICE vehicle.

Jeff Nieman, senior vice president of operational initiatives, said Hertz doesn’t disclose the total number of vehicles in its fleet, so it’s unknown how many Teslas are available in more than 30 markets currently. offers electric vehicles, including the first of 65,000 Polestar 2, an electric vehicle brand co-owned by Volvo and Chinese parent company Gheely, which plans to list shares through a SPAC deal. – Hertz has started buying in a five-year agreement announced in April. However, Nieman said, he is confident that electric vehicles will represent “more than 30% of our fleet by the end of 2024.”

Meanwhile, Hertz has several hundred thousand ICE models in the US that will be leased for years to come, said Chris Woronka, an analyst at Deutsche Bank. Even so, “they have decided to bring the EV torch to the industry and have been very candid about their plans and goals,” he said.

Look no further than the series of Hertz TV spots, starring NFL superstar Tom Brady touting Tesla car rentals, which aired during this year’s Super Bowl. Hertz has also created a dedicated area on its website to help educate motorists about electric vehicles.

Electric vehicle rental for ESG-focused, carbon neutral businesses

According to Woronka, Hertz’s main target is the enterprise market. “Entertainment customers may think it’s cool to drive an electric car, but the game is longer on the company side,” he said.

In addition to comparing employee costs of driving EVs versus ICE cars — which are currently deviating from the national average of about $5 for a gallon of conventional gas — companies look at electric vehicles. is a quantifiable way to reduce their greenhouse gas (GHG) emissions, meet bogus goals, and ignite their environmental, social and governance (ESG) gains among stakeholders. sustainable development investment and advocacy groups.

“Early research has shown that corporate accounts will be willing to pay a premium for EVs, because it helps them meet some of their ESG goals,” says Woronka.

Sara Forni, director of clean vehicles for the Enterprise Electric Vehicle Alliance (CEVA), says it’s no surprise that rental companies themselves are embracing the concept. While they certainly “want to have more butt in the EV seat,” she said, “they also want to meet sustainability goals and greenhouse gas emissions reduction targets.”

Siemens US, a subsidiary of the German-based consortium, was a flagship member of CEVA and was part of the Hertz EV program last fall. “We fully support the global ESG and decarbonization targets, and our fleet generates the largest emissions in scope 1 and they are,” said Randall Achterberg, North America Travel Cargo Manager. I am making progress with an aggressive EV conversion strategy,” referring to the GHG produced by Siemens’ US fleet of nearly 10,000 vehicles. “On the travel agency side, we want to expand the use of electric vehicles by employees.”

To date, Siemens has booked more than 100 electric vehicles for hire with Hertz. “We’re not pushing as much as we’d like, because they’re not ready,” Achterberg said, acknowledging the obstacles inherent in EV implementation. Siemens is easing one obstacle: it builds EV charging stations and has committed to manufacturing one million charging stations in the US over the next three years.

Enterprise’s original Orlando EV car rental test

The business may not be as successful as Hertz with its electric car rental program, but the privately held company, headquartered in St. Louis, has been in the discovery phase since 2014. That’s the year it started getting involved Orlando electric car driver for pilot rentala multi-year study funded by the Electrification Coalition, a Washington, DC-based nonprofit that advocates for EV adoption, especially among fleet owners.

The pilot, funded in part by the US Department of Energy, is focused at Orlando International Airport, as well as resorts and theme parks in the area. “We also have close partnerships with local regulatory and policy-making agencies, which is crucial in making sure we’re getting it right,” said Chris Haffenreffer, assistant vice president. Enterprise’s innovation manager said. The company rents out electric cars to tourists, including Chevy Volts and Nissan Leafs, who are incentivized with perks like free charging, parking, and valet service.

“Even though the EV was [then] Haffenreffer adds that it is very important to put employees in the back of electric vehicles, so that they can actively communicate with customers, as well as cooperate with other units to invest in toll infrastructure.

Although rental companies say they are building their own charging stations, another key partner is the US government, which in last year’s bipartisan infrastructure bill spent $7.5 billion USD to the states to create a network of electric vehicle charging stations. Earlier this month, the Biden administration proposed regulations that would require stations built on interstates with federal dollars to be spaced no more than 50 miles apart.

Enterprise, like Hertz, is focusing on commercial charter fleets and fleet management, where corporate customers will appreciate lower operating and maintenance costs. “It’s about being a trusted advisor to those customers, helping them understand how electric vehicles operate and the benefits,” says Haffenreffer. But for recreational car hires, figuring out how to get from point A to point B and how to charge the car is becoming increasingly difficult, says Haffenreffer.

Parsippany, New Jersey-based Avis saw its shares soar in early November after it said it entered the electric car rental business a week after the Hertz- Tesla crashed, and even though it went down with the entire market, CEO Joe Ferraro told analysts on a conference call at the time, “You’ll see us in the future as positive.” much more in power scenarios as the situation evolves.”

Avis has remained tight-lipped since then and declined to comment on this article. But Woronka said, “I listen to them.” He cited the exposure of the car rental company’s large corporate fleet as a reason. “They’re just not ready to pull back the curtain on what they’re doing,” he said.

American automakers are spending billions of dollars to ramp up production of electric vehicles. Synthetic engine aims to deliver 400,000 EVs in North America by the end of 2023, and Ford has committed to 600,000 by that time. Considering that renting an EV is essentially an extended test drive, the rental market is seen as an important driver in President Joe Biden’s Plan half of all new cars and trucks sold by 2030 are zero-emissions vehicles.

“In our view, the rental car market makes a lot of sense, especially as OEMs enter the longer-range electric vehicle sector,” said Ben Prochazka, chief executive officer of Electrification Coalition. “What a great way to expose consumers to new technology in a low-risk environment.”

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