Opinion: The Hertz EV Gambit Isn’t Paying Off

Matt Posky
by Matt Posky

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 Bradymy 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.

From AN:

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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Matt Posky
Matt Posky

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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  • Kos65701744 Kos65701744 on Feb 09, 2023

    Just back from a couples trip to Vegas. Had a blast in our rental Grand Cherokee L. We were 3 couples and took a road trip to the Grand Canyon at the spur of the moment. All of us agreed no way in hell we'd be in an EV in remote area traveling that far. No issue finding Gas Stations along the route. With the state economy and the logistics nightwork, it'll be 50 years before EV's will dominate the Rental Car industry.

  • Daryll Rardon Daryll Rardon on Apr 03, 2023

    Have rented a couple of Tesla from Hertz this year. Price was comparable to a mid-size and the cost to return below 70% state of charge is a flat $35 so cheaper than a pre-paid tank of gas. The second one I did recharge - finding a charger was easy on the car's navi. Would I do it on a longer business trip? Not sure, I guess it would depend on where it was and how many chargers there are. Have not seen many hotels that I use (primarily IHG group - Holiday Inn etc.) with EV chargers available so I don't see that as a benefit. Also have not rented a non-Tesla car for the same reason - don't want to deal with the issues that I have read about regarding public non-Tesla charging stations.

  • Ronin Let's see the actuals first, then we can decide using science.What has been the effect of auto pollution levels since the 70s when pollution control devices were first introduced? Since the 80s when they were increased?How much has auto pollution specifically been reduced since the introduction of hybrid vehicles? Of e-vehicles?We should well be able to measure the benefits by now, by category of engine. We shouldn't have to continue to just guess the benefits. And if we can't specifically and in detail measure the benefits by now, it should make a rational person wonder if there really are any real world benefits.
  • TheEndlessEnigma Simply put, I like it.
  • TheEndlessEnigma Ah GM, never stop being you. GM is working hard to make FIAT look good.
  • TheEndlessEnigma Top Gear of the 2000's was a fresh concept and very well done. Sadly to say there isn't a TV show concept that doesn't eventually exhaust fresh ideas and, as a result, begins to rehash and wear out once were fresh ideas. The show eventually becomes a pale imitation of itself, then begins to embarrass itself, it will get to a point where it jumps the shark. Top Gear began to get stale, the Clarkson, Hammond and May left and the formula failed - surprise! the presenters were part of the magic. Fast forward many years and Grand Tower is trying hard to be Top Gear but it's all very obviously scripted (it always was by felt spontaneous in its original form), Clarkson, Hammond and May are much older, tired and have become caricatures of themselves. Guys, just stop. You should have stopped 10 years ago. Now you're just screwing with your reputations and legacies.
  • FreedMike Kudos to Toyota for making a legitimately slick looking piece (particularly in metallic cherry red). But PHEVs seem like a very narrow niche to me. Yes, the concept is cool - if you play your cards right you never have to fill up with gas, and the gas engine means you don't have to worry about charging facilities - but the operative words are "if you play your cards right." And PHEVs have all the drawbacks of EVs - spotty charging availability, decreased range in cold conditions, and higher price. Personally, I'd opt for a non plug-in Prius and use the plug-in money to upgrade the trim level. It's slower, but even the base Prius performs roughly on par with a Corolla or Civic, so it's not a dog anymore. But who buys a Prius to go fast in the first place? If I wanted to "go gas free," I'd just buy a BEV. YMMV, of course.