In the single-largest EV order for any company, the rental giant Hertz has placed an order for 100,000 Tesla vehicles, in addition to plans to build up its EV charging infrastructure. Hertz is calling the deal an initial order, one that is slated to be completed by the end of 2022. The move means the company will see its rental car holdings swell by a significant number following a pandemic-prompted sell-off last year that saw rental companies shed hundreds of thousands of vehicles.
The purchase, one that will net Tesla several billion dollars, will see the automaker supply the rental chain with Model 3 vehicles—the sole Tesla model mentioned at the moment by both companies—and one that perhaps makes the most sense from a consumer and manufacturing standpoint.
Customers will be able to rent Model 3s in early November 2021, both in the US and in Europe. However, Hertz did not elaborate just how many Model 3s would be available through its locations at this early stage in 2021.
“Today, 40 percent of US consumers say they are likely to consider an electric vehicle the next time they are in the market for a new vehicle, according to Pew. Global EV sales skyrocketed 200 percent in the last year and will likely continue to grow with commitments from global automakers to increase EV sales,” Hertz said in a statement. “For example, in August, three US automakers pledged to boost EV sales to 40-50 percent by 2030.”
Hertz will roll out a new ad campaign featuring Tom Brady to promote the vehicles for consumers, with the company giving a preview of the TV spots this week.
Hertz indicated that the order itself will mean that 20% of its rental vehicles worldwide will be EVs by the end of 2023, with the company also intending to boost its offerings of Level 2 and DC fast charging.
“Hertz’s massive order to tap Tesla for more than 100,000 vehicles is a huge step in guiding prospective consumers into EVs who may be hesitant on fully pulling the trigger on purchasing one,” Robby DeGraff, Industry Analyst at AutoPacific told Autoweek. “It’s a pretty brilliant approach I think. Renting a car for days on end can be a valuable way to really gauge the ins-and-outs of a vehicle, especially if it’s one you’ve maybe had the itch to consider buying. With a huge amount of Teslas soon to be available for rent, that’s going to open up the doors to let prospective shoppers get a taste at what EV ownership may be like. Not only will renters of Teslas through Hertz get a chance to experience the brand’s alluring tech and performance benefits, they’ll also be able to take advantage of the impressive Supercharger network.”
Where will Tesla get this many extra vehicles in a span of 14 months, amid already-long delivery times?
Two Tesla plants are expected to come online in the next few weeks, including Berlin-Brandenburg that is scheduled to start producing vehicles in December, and the Austin, Texas, Gigafactory that is expected to begin production in the next couple of months. Additionally, Tesla has the Shanghai plant to rely on if needed, which has been supplying vehicles to western Europe for the past several weeks. It’s expected that the bulk of the order will come from existing US plants.
“In the end it’s going to be a great educational experience benefiting not only Tesla, but other automakers that offer EVs,” DeGraff added. “You may have a curious customer who rents a Tesla for a week, isn’t a fan of the product itself yet likes the idea of driving electric and feels more inclined to then go test another EV like Ford’s Mustang Mach-E or a Nissan Leaf, for example. The more direct first-hand exposure to EVs people have, the quicker and easier the transition away from (internal combustion engines) is going to be.”
The move itself has propelled Tesla stock value past the $1 trillion mark in Monday trading, making it one of just a handful of companies to have have broken through that barrier in market valuation.
“Electric vehicles are now mainstream, and we’ve only just begun to see rising global demand and interest,” said Hertz interim CEO Mark Fields. “The new Hertz is going to lead the way as a mobility company, starting with the largest EV rental fleet in North America and a commitment to grow our EV fleet and provide the best rental and recharging experience for leisure and business customers around the world.”
Hertz itself exited bankruptcy only in June of this year, after a tumultuous period that dated back to the start of the pandemic that pushed the rental giant, and others, into uncharted waters as travel came to a standstill in the early months of the outbreak. Like other rental companies, Hertz moved to liquidate a large portion of its fleet, also closing locations in the process.
The drastic move by Hertz and other rental companies saw a dramatic reversal early this spring as travel rebounded, but rental car companies were now short on cars and locations, leading to some significant price hikes for available vehicles. The rental industry is still slowly rebounding, now hampered by the chip shortage crisis that has prevented almost all automakers from operating at peak capacity. As a result, rental car fleets are not expected to recover to needed levels for quite some, until late 2022 at the latest, based on current trends.
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