Opinion: The Hertz EV Gambit Isn’t Paying Off
Hertz has reportedly fallen short of its promise to buy 100,000 electric vehicles from Tesla last year. Though, taking a look at the role EVs are playing in the rental industry right now, the company might actually have made the correct decision.
Loads of rental agencies have started offering all-electric models. The assumption was that many drivers might opt for an EV just to try one out and the brand would look like it’s doing something for the environment. Hertz was more upfront about this than the rest and even launched an advertising campaign featuring Tom Brady – my least favorite brand ambassador – promoting the Tesla models the company had recently added to its fleet.
However, based on the firm’s annual regulatory filing, Hertz only has about half the EVs it said it would purchase in 2022. Automotive News noticed that the business’ fleet for the Americas peaked at 428,700 vehicles last year. That’s 47,157 units out of a promised 100,000.
Hertz’s October 2021 announcement of its Tesla order sent the electric-vehicle maker’s valuation soaring past $1 trillion for the first time. It also helped drum up interest in the rental-car company, which staged its post-bankruptcy public offering two weeks later.
Elon Musk tempered Tesla’s stock rally somewhat days after Hertz made its announcement, tweeting that no contract had been signed and that the EV maker had far more demand than production. Tesla’s market capitalization was $616.2 billion at the close of trading Monday.
Hertz’s filing provides some clues as to why it’s added far fewer Teslas than the car renter said it would order. The first risk factor the company lists pertaining to its EV initiatives is that the strategy depends on the “ability to secure adequate vehicle supply within the time frame we, and our customers, expect.”
Another factor that may have come into play: Tesla raised prices on several occasions last year, which might have made acquiring cars costlier than Hertz expected. That’s less of an issue after Tesla slashed prices across its lineup last month.
Your author is also under the impression that the EVs aren’t getting as much attention as Hertz would have hoped. Based on some cursory research, most all-electric rentals don’t tend to be priced much higher than smaller vehicles representing the best deals. Meanwhile, rental offices located in colder climates often have EVs being displayed at significant discounts. The Hertz office nearest to your author actually had a weekly Tesla Model 3 coming in around $40 cheaper than a “Chevrolet Spark or similar.” Keep in mind that a brand-new Model 3 starts at around $45,000 whereas the Chevy Spark starts just below $14,000.
Keeping in mind that Hertz is supposed to have a limited number of Tesla vehicles on hand, one would assume they’d be priced closer to its premium or large rentals. But they’re not even close. Unless you’re renting from a location that doesn’t have very cold winters, you can basically guarantee any EV rentals will be priced competitively against the bottom rung. Everything else will be vastly more expensive.
There have likewise been murmurings about how scads of rental offices simply aren’t set up to contend with electric vehicles. Forbes published an article last month that dove into the topic, noting that customers and rental agency staff were equally annoyed with charging schemes. Trying to return a rental with the same amount of gas you left with is difficult enough. But trying to do the same with an EV’s state of charge is made significantly harder due to the longer charging times and the likelihood that the closest station might not be all that close to the place you need to drive to.
Many rental offices also aren’t set up to recharge a large number of EVs, resulting in some vehicles having to wait around until there’s a place to plug in. While a lot of companies are offering customers some wiggle room, it’s still been a contentious issue for almost every rental agency offering battery electric cars.
[Image: Jonathan Weiss/Shutterstock]
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A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.
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