Environment

Tesla-Hertz EV deal is climate change tipping point for national car rental fleets

Published

3 years ago

October 26, 2021

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The economics of the rental car industry give companies including Avis Budget Group and Enterprise Holdings multiple reasons to go slow on the adoption of electric vehicles. Just think of how much money they make every time a renter forgets to return a car with a full gas tank. But on Monday, the rental car companies received the biggest reason yet to move quicker to EVs as part of their fleets. The deal between Hertz and Tesla for 100,000 vehicles is a signal to the major car rental companies that a strategy for EVs is going to be needed, and maybe sooner than they had planned on it.

It was not a surprise to auto industry analyst John Healy of Northcoast Research that Hertz is the first among the small group of major rental car companies to place a big bet on EVs. After an era of industry consolidation, the three companies represent as much as 95% of the car rental agencies at an airport terminal: Enterprise owns Alamo and National; Hertz owns Dollar and Thrifty; Avis combined with Budget. But it’s only Hertz that has offered EVs in any significant way to date, and its focus was limited to the niche market of luxury renters using its premium services such as Ultimate Choice.

“There hasn’t been a lot going on in electric,” said Healy.

That “ultimate” vehicle category offered consumers access to high-end electric cars from Porsche and Tesla, among others, but the numbers were at the level of a “few hundred” in the fleet versus the 100,000 Teslas in the Hertz deal. “They were trying to make money renting cars, not meet this niche,” Healy said of the main competitors. Hertz saw the affluent renter combined with an EV “intrigue” factor as enough of a reason to experiment on the margins of the business, “but nothing more than that,” Healy said.

Enterprise and Avis Budget did not immediately respond to requests for comment.

If demand hasn’t been there yet to justify a major spend on an EV fleet, the Hertz deal may be the signal that the time has come. But there are big economic hurdles for the rental car industry to overcome that are related to hesitation about EVs to date.

As Hertz prepares to re-IPO after restructuring under private equity investors and with former Ford CEO Mark Fields in as interim-CEO, the Tesla headline gives it another way to differentiate itself in a consolidated rental car space. But ultimately EV fleets are an issue the major rental car companies are all going to need to work through as part of sustainability commitments and new economic thinking.

Dan Ives, analyst at Wedbush Securities who covers Tesla, said the rental car fleets were always viewed as “untouchable” because of the scale of their bulk purchases. “The fact that Hertz dove into the deep end of pool and is spending over $4 billion, that was never even on the radar for the likes of a Tesla,” he said. But now it represents a tipping point not only in EV interest from the market but the supply that Tesla can produce with its factory operations expanding around the world and, within the U.S., to Austin.

The rental car industry represents 1.5 million to 2 million cars per year, a significant part of new sales.

“For Tesla that is 2 million cars that were never on the radar,” Ives said.

Tesla reached a $1 trillion market capitalization on Monday after the deal was announced.

“This announcement is a clear signal from Tesla that they can deliver a large volume of vehicles,” Jonathan Smoke, chief economist at Cox Automotive, wrote in an emailed statement to CNBC.

Size of EVs for rental has been an issue beyond the luxury market with the sedans too small for most renters’ preferences, but that is changing with the production of more crossover EVs and other hybrid vehicles. The crossover utility segment accounted for 50% of EV sales in the second quarter.

While the carbon footprint of the car rental industry has not been a primary focus of the U.S. government, the pressure is expected to increase in the future and there has been talk among those who follow the industry, Healy said, that President Biden wants the rental car companies to commit to electric vehicle fleets.

“The government push is yet to be determined but it’s probably not going away,” Healy said.

The car rental agencies have sustainability in their business models, such as Enterprise’s carbon offsets program and a longstanding research affiliation it has in the biofuels area. Enterprise has reported on Scope 1 and Scope 2 carbon emissions for years, but not the scope 3 emissions that occur at the tailpipes of its fleet cars. Avis Budget also offers carbon offsets, carbon footprint estimates for corporate clients and cites its acquisition of car-sharing company Zipcar as part of its sustainability initiatives. Avis Budget reports 21,000-plus hybrid vehicles in its fleet globally.

Shareholders advocates focused on ESG have pressed the issue with Avis and Hertz. Shareholders asked Avis to purchase 40,000 EVs. A Hertz shareholder climate resolution in 2020 included EVs as part of a broader discussion on climate change. “Hertz’ standard rental car business currently has only three hybrid electric vehicle options at select locations for consumer rentals, with no all-electric vehicles. While Hertz has taken steps to improve energy efficiency for its operational facilities, the impact of the company’s fleet remains insufficiently addressed,” shareholder advocacy group As You Sow wrote in the 2020 measure.

Driss Lembachar, manager of transportation and infrastructure at Morningstar’s Sustainalytics ESG risk evaluation business, said car rental companies are less exposed to car emissions than automakers, given that the ultimate responsibility for emissions and meeting fuel economy standards from a regulatory point of view mainly rests with car manufacturers. But the fuel efficiency and age of a car rental company’s fleet and its renewal (or lack thereof) is material to investors since these areas impact its attractiveness and customer satisfaction/retention levels.

Sales in the U.S. of zero emissions cars continue to rise, with more than 168,000 zero emission vehicles (battery, plug-in hybrid, and fuel cell electric vehicles) sold in the second quarter of 2021, a 33% increase and 122,000 units more than the same period in 2020, according to industry trade group Alliance for Automotive Innovation. It noted Q2 2021 sales represented 3.8% of the auto market, their highest percentage ever. The auto industry is investing $330 billion in electrification by 2025 and it forecasts more than 130 zero-emission vehicles and 30 hybrid-electric models will be available in the next five years.

The upfront expense for the rental car companies from EV adoption, not only in the purchase price of cars, but in the build out of the charging station infrastructure they would need, have been major reasons for moving slowly, and the current economics of the rental car business makes staying with gas-powered cars attractive. Rental companies make money every time a car is returned without a full tank of gas, and while that represents only about 5% of total revenue, according to Healy, it is high margin revenue. While business models can presumably be developed to charge for “topping off” an EV, there is no established practice for that today.

That is one of the unknowns the rental car agencies are going to experience in a steep learning curve for fleet management with EVs. The timing of EV charging has to be taken into account as part of moving cars in and out of agency lots, and there are basic questions they still can’t answer: how many charging stations will they need, and how many will have to be fast-charging. It takes two minutes if not less to put gas in the car, but it could take hours to charge a car and that time differential could be significant in meeting customer demand.

Analysis of older EVs in recent years as Tesla customer service received scrutiny showed that they can present a unique maintenance and servicing profile. Hans-Werner Kaas, Senior Partner at McKinsey and Company, told CNBC in 2019 that fixes for EVs may be less frequent overall, but more expensive, and equipment including ride control and tires may require more frequent service or replacement due to the higher curb weight and acceleration of electric vehicles.

There are potential economic advantages that EVs may offer rental car companies. They could potentially save money on maintenance and the residual value of the cars hold up better. But all of the unknowns associated with unit economics on EVs have taken precedence over any potential economic benefits.

“Their view was that there is not enough infrastructure and no salivating custom that wants it, so why change anything?” Healy said. “There view has been ‘we will wait and see, but now is not the time.”

For Hertz, in process of coming back to the public market with an IPO, the timing is good for a big announcement related to its positioning versus competitors.

The major car rental agencies have tended to follow each others’ moves in recent history whether it is marketing approach or how they charge customers for various services, and with the space consolidated among the major three players, there will be pressure on Avis Budget and Enterprise Holdings to make moves in the EV space. That could be with Tesla, though they might be getting in line for deliveries behind Hertz, or the major automakers, including GM and Ford, planning to produce a large number of EVs in the years ahead. Rental car agencies have historically focused fleet purchases on the U.S. automakers before adding units from overseas.

“I would think Avis and Enterprise need to respond with something,” Healy said. “This has been a been copycat business for the last 50 years and that won’t change.”

Ives cited a saying about the car industry, that with bulk orders there is never just one. “I would be shocked if the other competitors of Hertz haven’t put in calls to Tesla,” Ives said.

With a changing consumer landscape and more interest in EVs, the rental car agencies will risk losing business if they move too slowly. Healy expects more consumers in the future will be willing to pay extra to try an EV. “If I can rent a Tesla for an extra $40 a day at Hertz … and Avis doesn’t have it, I might try. … There is a customer who will respond to this and on the margins, Hertz is in a better spot.”

For Tesla, the deal is a good way to introduce consumers who have never driven an electric vehicle before to the technology, especially as the sales prices of EVs relative to traditional cars come down to a level where there is more room for mass adoption.

“Every consumer that gets into a rental car car could be a conversion to a buyer … it’s an extended test drive,” Ives said.

If the rental car industry remains hesitant, it isn’t because the companies lack the money to spend on EVs. “The industry has never been more profitable,” Healy said. Amid the chip shortages that have limited car production, fleet size is only up 15% against demand that is now back up to 80-85% of the pre-pandemic level, according to Healy. The value of the cars on their balance sheets also have been appreciating in contrast to the typical depreciation they would expect in used cars.

The coming quarterly results should show record profitability and in the current market of high demand and limited car supply, the rental car companies are able to charge as much as double what would have been normal pricing in the past. “If you need the minivan in Florida you are going to pay $100 rather than $75 a day,” Healy said.

There also isn’t much else out there for these companies to buy even as their balance sheets are strong with the industry controlled by the three main players, making more consolidation less likely.

Healy said more changes are occurring across the auto landscape and beginning to get the focus from the businesses ancillary to the carmakers. He covers the auction space and noted that Manheim, the largest auction house, recently said in an investor presentation that it will retrofit 53 auction locations with 127 EV stations for charging and the diagnostic work on battery condition it needs to perform to properly assess the value of an EV up for auction. “We starting to see some change among adjacent companies in the industry,” Healy said.

Environment

Hyundai’s super-efficient Ioniq 6 updated with sportier look, ‘N’ model coming soon

Published

4 hours ago

April 3, 2025

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Hyundai's super-efficient Ioniq 6 updated with sportier look, 'N' model coming soon

Hyundai has unveiled the design refresh of its Ioniq 6 sedan, and announced that it will become a family of cars rather than a single model, with an N Line trim and upcoming N performance model, much like its sister car the Ioniq 5.

Hyundai has been doing great with its EVs lately, hitting sales records and getting great reviews.

Much of that focus has been on the Ioniq 5, an attractive crossover SUV with lots of capability at a good price – and a bonkers N performance version which has been breaking different kinds of records.

The Ioniq 6, conversely, hasn’t attracted quite as much attention, even though it has some records of its own (it’s the most efficient vehicle in the US… for under $70k).

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Between its admittedly odd looks – much more aerodynamic and rounded than the comparatively blocky 5 – and it fitting into the less-popular (but better) sedan form factor, it just hasn’t captured as much imagination as the 5.

It has also fallen somewhat behind. The Ioniq 5 got a big update this year, including a native NACS port, the first non-Tesla mass market vehicle to hit the road with one of these included (and it even charges faster than a Tesla does on home turf). The 6, however, is still sitting on its original design from when it first started production/shipping in 2022/23.

But that’s about to change, as Hyundai is giving the model some love with a design update and some hints at new things to come.

We’ve seen spy shots of these design updates before, but now Hyundai is showing them to everyone at the Seoul Mobility Show.

Hyundai showed two models today, the standard Ioniq 6 and the “N Line,” an upgraded trim level with some interior and exterior changes to look a little more sporty. Hyundai has used similar nomenclature for its other models, and that carries over here.

Both have a redesigned front end, making it look more aggressive than the prior bulbous and aerodynamic shape, and narrower headlights.

The N Line looks even more aggressive than the standard model, though, with an even more aggressive front and rear end.

Hyundai says that the redesign will also include interior enhancements for “a more comfortable, intuitive experience,” with a redesigned steering wheel, larger climate control display, upgraded materials and redesigned center console with more physical controls.

Beyond this, the refresh was light on details – intentionally, with a full unveil of specs and changes coming later. We can imagine a lot of the improvements on the 2025 Ioniq 5 will be carried over, such as a native NACS port for example, and potentially a slightly larger or faster-charging battery.

We had also previously heard hints that an N version (yes, “N” and “N Line” are different, no, we don’t know why they used these confusing names) of the Ioniq 6 is coming, and Hyundai reiterated those hints today – even giving us a glimpse of the car in the background of one of its shots.

Now THIS one looks quite aggressive, with a bigger double wing and potentially some changes to the diffuser (it’s hard to tell from the shot, as the N Line also has a modified diffuser).

The ioniq 5N has earned rave reviews from enthusiasts for its bonkers driving dynamics and comparatively reasonable price for a true performance vehicle. But it’s still an SUV format, and frankly, an SUV will never be a sportscar no matter how many horsepower you put into it (I will die on this hill).

The 6, however, with its sedan shape and footprint, could make for a much more compelling sports package once it’s all put together. So we’re very excited to see what Hyundai can do if they apply the same magic they put into the 5 into a new 6N. Looking forward to July.

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Environment

1,500 new Colorado homes will come with geothermal heat pumps

Published

13 hours ago

April 2, 2025

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1,500 new Colorado homes will come with geothermal heat pumps

geothermal Dandelion Lennar — Image: Dandelion Energy

Over the next two years, homebuilder Lennar is outfitting more than 1,500 new Colorado homes with Dandelion Energy’s geothermal systems in one of the largest residential geothermal rollouts in the US.

The big draw for homeowners is lower energy bills and cleaner heating and cooling. Dandelion claims Lennar homeowners with geothermal systems will collectively save around $30 million over the next 20 years compared to using air-source heat pumps. Geothermal heat pumps don’t need outdoor AC units or conventional heating systems, either.

Geothermal systems use the sustained temperature of the ground to heat or cool a home. A ground loop system absorbs heat energy (BTUs) from the earth so that it can be transferred to a heat pump and efficiently converted into warmth for a home. Dandelion says its ground loop systems are built to last for over 50 years and should require no maintenance.

Dandelion’s geothermal system uses a vertical ground closed-loop system that is installed using well-boring equipment and trenched back into the house to connect to a heat pump. The pipes circulate a mixture of water and propylene glycol, a food-grade antifreeze, that absorbs the ground’s temperature. A ground source heat pump circulates the liquid through the ground loops and it exchanges its heat energy in the heat pump with liquid refrigerant. The refrigerant is converted to vapor, compressed to increase its temperature, then passed through a heat exchanger to transfer heat to the air, which is circulated through a home’s HVAC ductwork.

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Daniel Yates, Dandelion Energy’s CEO, called the partnership with Lennar a “new benchmark for affordable, energy-efficient, and high-quality home heating and cooling.” By streamlining its installation process, Dandelion is making geothermal systems simpler and cheaper for homebuilders and homeowners to adopt.

This collaboration is happening at a time when Colorado is pushing hard to meet its clean energy targets. Governor Jared Polis is excited about the move, calling it a win for Coloradans’ wallets, air quality, and the state’s leadership on geothermal energy. Will Toor, executive director of the Colorado Energy Office, said that “ensuring affordable access to geothermal heating and cooling is essential to achieve net-zero emissions by 2050, and we’re excited to be part of such a huge effort to bring this technology to so many new Colorado homes.”

And it’s not just about cutting emissions – geothermal heat pumps help reduce peak electric demand. Analysis from the Department of Energy found that widespread adoption of these systems could save the US from needing 24,500 miles of new transmission lines. That’s like crossing the continental US eight times.

Colorado is making this transition a lot more attractive through state tax credits and Xcel Energy’s rebate programs. These incentives slash upfront costs for builders like Lennar, making geothermal installations more financially viable. The utility’s Clean Heat Plan and electrification strategy are working to keep energy bills low while meeting climate goals.

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Environment

Polestar 2 removed from Polestar’s US website alongside tariff announcement

Published

14 hours ago

April 2, 2025

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Polestar 2 removed from Polestar's US website alongside tariff announcement

Polestar has removed the Polestar 2 from its US website header in an early sign of how new tariffs will restrict choice and competition for American consumers, thus increasing prices.

The Polestar 2 is Polestar’s first full EV – the original Polestar 1 was a limited-edition plug-in hybrid.

It started production in 2020 in Luqiao, Zhejiang, China, where Polestar and Volvo’s parent corporation, Geely, was founded.

And there’s the rub: while Polestar’s newer EV, the 3 (which we just drove the new single motor version of last week), is built in South Carolina, the 2 is not.

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Unfortunately, that interacts with some news that has been getting a lot of play lately: tariffs.

The US has been gradually getting stupider and stupider on the issue of tariffs, apparently determined to increase prices for Americans and decrease the competitiveness of American manufacturing in a time of change for the auto industry.

It is widely acknowledged (by anyone who has given it a few seconds of thought) that tariffs increase prices and that trade barriers tend to reduce competition, leading to less innovation.

It started with 25% tariffs on various products from China, implemented in the 2018-2020 timeframe. Then, in 2024, President Biden implemented a 100% tariff on Chinese EVs, effectively stopping their sale in the US. These tariffs included some exceptions and credits based on Volvo’s other US manufacturing, which Polestar had used to keep the most expensive versions of the 2 on sale in the US, while restricting the lower-priced versions from sale. Nevertheless, they were a bad idea.

Now, in yet another step to make America less competitive and inflate the prices of goods more for Americans, we got more tariff announcements today from a senile ex-reality TV host who wandered into the White House rose garden (which he does not belong in). These tariffs do not include the same exceptions as the previously-announced Biden tariffs.

Apparently this has all been enough for Polestar, as even in advance of today’s tariff announcements, the company suddenly removed its Polestar 2 from its website header today.

The change can be seen at polestar.com/us, where only the Polestar 3 and 4 are listed in the header area. On other sites, like the company’s Norwegian website or British website, the car is still there. The Polestar 2 page is still up on the US website, but it isn’t linked to elsewhere on the site (we’ll see how long it stays up).

We reached out to Polestar for comment, but didn’t hear anything back before publication. We’ll update if we do.

It makes sense that the Polestar 2 would still be for sale elsewhere, as it only started production in 2020. Most car models are available for at least 7 years, so this is an earlier exit than expected.

So it’s likely that all of the tariff news is what had an effect in killing the Polestar 2.

Then again, this is also just the second day of a new fiscal quarter. Perhaps the timing offers Polestar an opportunity to make a clean break – especially now that the lower-priced version of its Polestar 3 is available.

Despite the lower $67.5k base price of the new Polestar 3 variant, that represents a big increase in price for the brand, which had sold the base model Polestar 2 for around $50k originally, before all of these tariffs.

Update: Polestar got back to us with comment, but understandably, it doesn’t say much:

Polestar is a three-car company and Polestar 2 is available for customers now. There are a select number of Polestar 2s in stock at retailers that can be found on Polestar.com, but Polestar 3 and Polestar 4 will be the priority in the North American market.

Electrek’s Take

This isn’t the first car that America has been deprived of due to tariffs. The Volvo EX30, one of our most anticipated vehicles, and Electrek’s Vehicle of the Year for 2024, had its American availability pushed back due to tariffs.

Volvo decided to build the car in Belgium and export it to the US, but now that new tariffs apply to the EU as well, maybe that low-priced, awesome, fast, small EV will instead stay in Europe instead of being shipped overseas.

This shows how mercurial tariff fiats from an ignoramus are bad for manufacturing, as they mean that companies can’t make plans – and if they can’t make plans, eventually, they’ll probably just write the country making the random decisions out of their plans so they don’t have to deal with the nonsense.

And we’ve heard this from every businessperson or manufacturer representative we’ve talked to at any level of the automotive industry. Nobody thinks any of this is a good idea, because it objectively is not. All it does is make business harder, make the US less trustworthy, make things more expensive, and overall just harm America.

Yet another way that Americans are getting screwed by this stupid nonsense. 49% of you voted for inflation, and 100% of Americans are now getting it. Happy Inflation Day, everyone.

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