Post-Covid, post-bankruptcy Hertz is all-in on electric, with big implications for the EV, auto and rideshare market
Tesla Model 3 electric vehicles at a Hertz neighborhood location.
Hertz
Consumers may be on the fence about whether it’s yet time to buy EVs, but car-rental giant Hertz Global Holdings has made the leap.
Markets boosted shares of Estero, Fla.-based Hertz after its recent earnings report, as first-quarter revenue hit $2 billion and per-share earnings of 39 cents handily beat forecasts of 21 cents a share. But behind the short-term numbers is the company’s long-term adjustment to big changes in transportation, tourism and energy: Hertz is going electric.
The company plans to have 25% of its 500,000 vehicle fleet be electric by the end of 2024, up from 10 percent now, as it accelerates purchases under its deals to buy 330,000 vehicles from Tesla, Polestar, and General Motors. These deals began to roll out last year, after Hertz’s first Teslas hit the road in 2021 and experiments with rental EVs extended back over the past decade. GM vehicles are beginning to arrive in quantity now, Hertz CEO Stephen Scherr said on the company’s earnings call.
“At the end of [March], we had about 50,000 electric vehicles in our fleet, comprising approximately 10% of total cars,” Scherr said.
Recent price declines in the market as Tesla started a war for market share in a softer economy — though it recently moved prices back up — have helped the rental car company with its buying spree.
“I think the drop in price on EVs is an encouraging proposition for us in that if I’m 10% moving to 25%, and I’ll get higher from there, I’m obviously a happier and a better buyer at a lower price point than not,” Scherr said.
The company is forecasting nearly 2 million EV rentals in 2023, approximately 5 times the number of last year, he said.
Over time, EVs have the potential to remake the business model for rental car firms, according to Oppenheimer & Co. analyst Ian Zaffino.
For the rental car company, depreciation expense from EVs is lower than internal-combustion engine vehicles because Hertz keeps electric cars longer, and partly because they are cheaper to operate and anchor rideshare programs, another area where Hertz keeps cars longer. Rental car companies like Hertz and its rival Avis Budget Group keep them longer, Zaffino said, and at least for now, charge a premium price for many EVs, though a Hertz spokeswoman declined to confirm an average price for EVs or gasoline-powered vehicles.
Uber deal, rideshare market benefits rental car companies
The popularity with rideshare drivers who rent them by the week or month, allows rental firms to save on routine expenses like cleaning and contain marketing costs, though Deutsche Bank analyst Chris Woronka notes that rideshare drivers pay a lower average daily rate than other clients.
A traditional vehicle loses as much as 1.25% of its value each month, while EVs lose about 0.85% to 1%, Zaffino said. Multiply that by the 200,000 to 300,000 vehicles the company sells in any given year and the savings are substantial, he said.
“The more the vehicles hold their value, the less it costs to hold them,” Zaffino said.
That helps Hertz, which also owns the Dollar and Thrifty brands, to hold onto cars longer and buy fewer of them than it otherwise would, he said.
Hertz has also told analysts that the growing EV rideshare market can be a buffer against traditional quarterly peak to trough experienced in the leisure business.
As Covid pushed Hertz’s rental metrics down by nearly 50 percent, the ridesharing business was looking to recover from its own Covid-created downturn. So players like Uber and Lyft were primed to make deals with rental-car companies like Hertz and Avis.
Hertz’s deal with Uber lets drivers rent EVs for as little as $285 a week for a GM car like a Chevy Bolt EUV, rising to $334 and up for a Tesla Model 3 and higher for a Model Y SUV.
The benefits of using an EV begin with a $1 per ride credit to the driver for using an EV, Uber spokeswoman Alix Anfang said. Drivers also save on gasoline and depreciation. In addition, the driver is eligible for higher-priced fares under the company’s Uber Comfort Electric service, which is between the mid-tier Uber Comfort plan, which focuses on newer or more luxurious vehicles, and the more expensive Uber Black service. Rental fees also cover the driver’s commercial insurance, she said.
“We have a great EV story to tell – a few actually,” Anfang said in an e-mail. “We’re kicking off some driver education events to help with our mission to get them into EVs.”
An Uber-dedicated charger at a BP Pulse electric vehicle charging station in central London, U.K., on Monday, April 11, 2022.
Bloomberg | Bloomberg | Getty Images
Hertz says the average driver renting an EV rather than a gas-powered Hertz car will earn 10 to 15 percent more overall, and that 50,000 Uber drivers have rented an EV through Hertz, driving them more than 260 million miles. Uber says 4.1% of its U.S. miles driven are in an EV, eight times more than the general population.
That’s backed up by Tracy Lynn Young, who has driven for Uber in metro Atlanta for seven years. She pays $340 a week for her Tesla, and says she can bank $1,800 driving on a busy weekend, thanks partly to the EV incentives and the curiosity of riders who request a Tesla because they’ve never been in an EV. The incentives alone nearly pay for the car, she said.
Bonus: Her charging costs $120 a week less than her gas once did, monthly maintenance is included, and she’s saving her own car, which had racked up 95,000 miles in two years working as a rideshare driver and real-estate salesperson.
“When they want comfort, they want a ride in a Tesla,” Young said. “A lot of people want a ride in a Tesla [so] they can experience it.”
Business travel is half of Hertz rentals and is going electric
The company also benefits from the push for environmentally-focused corporate management, Zaffino said. Hertz gets almost exactly half of its rentals from business travelers, and many companies are turning to electric vehicle rentals as part of broader plans to reduce their carbon footprints, he said.
Hertz offers consumers incentives to assuage concerns about EVs’ range and scarce charging facilities, and to prod them to try the new cars, the company said.
Hertz, which has a partnership with BP‘s Pulse for the build-out of EV charging infrastructure at Hertz locations in major U.S. cities to serve both its customers and the public, isn’t charging customers for recharging if vehicles are returned at least 70 percent charged, and the company offers an option where the EV can be returned with a charge as low as 10 percent of capacity for a $35 up-front fee. It’s also offering 30 percent discounts on prepaid May EV rentals, using the early part of the summer travel peak to promote its transition.
“I think adoption will sort of continue to take hold,” Scherr told analysts on the recent earnings call.
He pointed to requirements on the way in cities across the U.S. that will require Uber and Lyft networks to be all-electric “by some date in the not-too-distant future” — five to seven years from now. “I would say to you that I think Hertz and our EV fleet is the most affordable entry point for drivers to get into those electric vehicles and use them,” he said. “And needless to say, I’m happy in that we get more of these EVs on rent at attractive rates but maybe most importantly, at attractive margins in terms of what we see happening.”
Tesla has released a new navigation feature to make it easier for people towing trailers to find charging stations that can accommodate them.
Towing trailers with electric vehicles is not yet super popular, but it is rapidly gaining in popularity, with more electric SUVs and pickup trucks having increasingly impressive towing capacity.
Tesla has had the Model Y and Model X with a limited but still useful towing capacity for a few years, but with now the Cybertruck and the opening of its Supercharger network to other EVs, including many pickup trucks, the automaker is starting to see more people arriving at its popular charging stations with trailers.
This can be problematic as if you don’t want to block several chargers, you are going to have to unhook your trailer to go charge your vehicle. That’s less than ideal and something gas-powered vehicles rarely have to do at gas stations.
Tesla’s solution has been to build a few “pull in” charging spots at some Supercharger stations that enable you to park with your trailer while charging (via Tesla Motors club):
Tesla is currently building more of these stations, but they are still far and few in between and hard to find.
The automaker is now making it easier to find with a new software update. Now, you can click on a Supercharger station, and it will tell you if it has trailer stalls.
Furthermore, if you are driving on “trailer mode” and searching for charging stations, those with “trailer friendly” stalls will appear at the top:
However, as usual, when traveling long distances in an electric vehicle, you are better off just doing a bit of planning about where to charge ahead of time, especially if you are going to be towing over long distances.
Now that Tesla can distinguish between trailer-friendly and non-trailer-friendly stations, the automaker can hopefully include it in its API for other automakers to integrate into their own navigation systems as many of them can start using the Supercharger network.
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Corporate America is investing in clean energy at record levels, with tech giants taking the top spots for users of solar.
Meta, Google, and Amazon are leading the charge in solar and battery storage adoption, according to the Solar Energy Industries Association’s (SEIA’s) latest “Solar Means Business” report.
Meta continues to hold the title of the top solar user in corporate America, with nearly 5.2 gigawatts (GW) of solar capacity installed. Meanwhile, Google leads the way in energy storage, boasting 936 megawatt-hours (MWh) of installed battery capacity. Through the first quarter of 2024, these companies have added the most solar capacity to their electricity portfolios, with major players like General Motors, Toyota, and US Steel also climbing the ranks.
The report reveals that US businesses have installed nearly 40 GW of solar capacity both onsite and offsite through Q1 2024, and corporate storage use now exceeds 1.8 gigawatt-hours (GWh). Even more growth is coming: Companies have over 3 GWh of battery storage under contract that will come online in the next five years.
“Some of the largest industrial and data operations in the world continue turning to solar and storage as a reliable, low-cost way to power their operations,” said SEIA president and CEO Abigail Ross Hopper.
Technology companies are at the forefront of this shift as data center growth drives skyrocketing electricity demand. Amazon, for example, leads the US with 13.6 GW of solar procurements under contract, while Meta and Google each have nearly 6 GW under contract – pipelines over 10 times larger than the next company in the rankings.
Target remains the US’s leading onsite corporate solar user for the ninth year in a row, with Prologis, Walmart, Amazon, and Blackstone also making the top five. For the first time, the “Solar Means Business” report is also tracking corporate battery energy storage, with Google, Apple, Meta, Target, Walmart, Home Depot, and Kohl’s among the top 10 companies using storage to meet more of their energy needs in real-time.
Looking ahead, both offsite and onsite energy storage are expected to play a bigger role in corporate renewable energy strategies. Medical companies like Kaiser Permanente are already using batteries to power microgrids, making their facilities more resilient to outages.
Carolyn Campbell, Meta’s head of clean and renewable energy, East, highlighted the importance of expanding solar capacity to match the company’s global operations with 100% clean energy: “We’re thrilled to rank number one for corporate solar procurement in SEIA’s report this year, and we continue to find ways to grow the grid to benefit everyone.”
Target’s vice president of property management, Erin Tyler, said of Target’s 20-year-old solar program, “Through our commitment to solar, we’re well on our way to achieving our corporate goal of sourcing 100% of electricity from renewable sources by 2030.”
The “Solar Means Business” report also looks at the policies driving corporate America’s adoption of solar. Many companies are taking advantage of the Inflation Reduction Act’s long-term clean energy incentives. To further accelerate their renewable energy investments, businesses are calling for improvements in interconnection processes, new community solar legislation, and simpler tax credit monetization.
Read more: A 100-MW solar farm just broke ground in Wisconsin
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Volkswagen Group Africa has officially begun production of a modern electric farm tractor at its multifunctional facility in Gashora, Rwanda in a bid to advance modern, low-emission agricultural initiatives in Africa.
Part of a larger Rwandan initiative called the GenFarm Project, the new VW tractor is part of a “holistic ecosystem” of electrified farming machinery set to be used throughout rural Africa – where liquid fossil fuels are often just as difficult to come by as electricity. The goal is to provide machinery that’s both sustainable and reliable.
“We are growing our footprint in Africa and regard Rwanda as a key growth market. This project demonstrates our commitment to sustainable practices and highlights our ability to provide mobility solutions to the rural community in addition to the urban community currently serviced by our Volkswagen Mobility Solutions Rwanda business,” explains Martina Biene, Volkswagen Group Africa Chairperson and Managing Director. “The GenFarm Project fosters technological innovation and aligns with Volkswagen Group’s strategy to generate meaningful value for both society and the environment through sustainable mobility.”
The GenFarm project will eventually provide mobility services for transportation of goods and people. In June 2023, Volkswagen Group Africa signed a Memorandum of Understanding (MoU) with the Government of Rwanda to provide land for the establishment of the GenFarm Project.
The Volkswagen tractors’ electric motor produces 20 kW (about 27 hp), making it about the same size as the Solectrac product (which hasn’t worked out well in the US, it must be said). That motor gets its electrons from a 32 kWh swappable battery. Batteries are swapped/charged at the Empowerment Hub to minimize downtime. DC fast charging isn’t available, but the relatively small, swappable batteries (hopefully) mean that’s not much of a problem.
The GenFarm project hopes the new VW electric tractor will help clean up Rwanda’s agricultural sector, which currently accounts for some 25% of the national Gross Domestic Product.
Electrek’s Take
We’ve talked a lot about the lack of new farmers in America, but the problem is global – especially as western companies, and western ideas about consumerism, continue to spread. Products like this electric tractor from VW will make farming cleaner, quieter, and (hopefully) more attractive to young workers.
SOURCE | IMAGES: VW Group Africa.
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