How the massive EV transition is starting in the car rental industry
Source：CNBC
From：Taiwan Trade Center, Los Angeles
Update Time：2022/09/08
Hertz, one of the three giants of the US Car Industry, has established a deal to purchase 100,000 Tesla fully electric vehicles (EVs) by the end of 2022. According to a Hertz spokesperson, EVs will represent “more than 30% of the Hertz fleet by the end of 2024.”
This revelation caused the company’s two main rivals, Enterprise Holdings and Avis Budget Group, to quickly announce their own transitions away from the traditional gas-powered engine, marking a dramatic shift. The $56-billion US car rental industry buys about one-tenth of auto manufacturers’ new cars every year.
Hertz Global Holdings has only just finished reorganizing after its bankruptcy from the previous summer, and its bold announcement of the $4.2 billion USD deal with Tesla has jumpstarted a race within the industry to transition to EVs. However, the full-scale adoption of EVs amongst car rental companies is still a far-off future. The sheer size of the car fleets amongst the three big rivals means that it is impossible to go completely EV within a year. There are two main constraints to the industry’s progress.
The first constraint is supply. With enduring supply-chain disruptions, new car numbers are far below that of expectations. In 2019, the industry acquired 2.1 million new vehicles from OEMs. In 2021, the number was a paltry 750,000. While US sales of EVs doubled in 2021, it is still just around 4% of the country’s market for cars and trucks.
The second constraint is the lack of EV charging stations. US EV infrastructure is comparatively lacking compared to Internal Combustion Engine (ICE) infrastructure. Many airports, hotels, resorts and highways currently lack charging stations. There is also the hurdle of educating and training agents, mechanics, and drivers on EVs as opposed to ICE model vehicles.
These constraints will eventually be overcome, as rental company’s eye the ultimate prize, the corporate market. While leisure customers might drive EVs because they think they are cool, companies view EVs as a quantifiable way to reduce their greenhouse gas (GHG) emissions. This allows them to meet net-zero goals and publicizing their environmental, social and governance (ESG) authenticity.
US automakers are spending billions to ramp up their EV production. General Motors expects to deliver 400,000 EVs to the North America market by the end of 2023, and Ford has a goal of 600,00 over the same time.
While this massive EV transition is underway, hundreds of thousands of ICE model cars will continue to be rented in the US market.
Source: https://www.cnbc.com/2022/06/18/how-the-massive-ev-transition-is-starting-in-the-car-rental-industry.html