Hertz, the global rental car company, expanded its offerings of electric vehicles (EVs) in the USA earlier this year and has seen widespread success with them. They offer a range of electric cars that are now available in 16 cities across the country.
During Hertz’s Earnings Call for Q2 the company gave several updates on its fleet of Polestar and Tesla electric vehicles. Hertz ordered 100,000 Tesla Model 3 and Model Y vehicles in October 2021 and followed this soon after with an order of 65,000 Polestar 2 electric crossover cars. They have proved especially popular with Uber drivers.
Stephen Scherr, Hertz CEO, said: “With respect to EV specifically, over 15,000 Uberdrivers to date have rented a Tesla from Hertz, at a minimum rate of $334 per week, comprising over half a million transaction days.
“Driver feedback has been positive and they remain drawn to the opportunity as gasoline prices remain elevated and demand for the service among Uber customers is strong.
“Our Tesla’s enabled Uber drivers could differentiate themselves and to improve upon the quality of their riders experience, and that translates into higher earnings for them.”
One of the bonuses of electric cars is that they require far less maintenance, thanks to fewer moving parts, than internal combustion engine (ICE) models. Hertz has seen this in the first half of the year and believes they have saved up 60 percent on maintenance costs.
Scherr added: “On maintenance, we are running kind of 50 percent to 60 percent of what maintenance costs are on ICE vehicles. That’s roughly in line with where we are. If there’s anyone surprised, it’s probably a slightly higher expense on tyres but not much more, and that’s embedded in the figure I’m giving you.
“So I would say, overall, we are very pleased with the results. They’re coming in roughly in line with what we thought when we first underwrote the move in this strategic direction.”
Kenny Cheung, Hertz’s CFO, said: “As for the primary drivers of the year-on-year increase, we experienced higher cost and transportation and fuel, reflecting the effect of broader inflationary trends as well as in maintenance on order fleet. We expect maintenance expenses to moderate as our fleet continues to grow younger.
“On the forward, we anticipate additional operating leverage as more expensive third-party labour strategically replaced with Hertz employees and we further reduced maintenance expense as we rejuvenate the fleet and continue to grow our number of EVs.”
While some customers might be reluctant to rent an electric vehicle initially, Hertz have found that once rental clients make the jump to an electric car, they’re more likely to come back simply because they’re so easy to drive and all the related features. As a result, Hertz have seen repeat custom for their electric vehicles.
Scherr said: “I think we have schooled our customers on how to use them, so much so that I think there’s an embedded tether there. They’re coming back to use the car and rent the car more frequently. And I think all of those are expressions of the first mover edge that we have around EVs.”
Another bonus Hertz have found with their electric fleet is that they are depreciating less than their combustion engine siblings. This, combined with lower running costs and less maintenance, makes them more economic to the company when it comes to selling them after their rental life. And the biggest bonus of all is that they are zero emissions throughout their life.
Surely, this has to be a huge motivator for other rental car firms to adopt and use electric cars in the same way as Hertz. It’s far more economical than the combustion engine model and is a great way of helping drivers transition to electric vehicles. It’s a win, win.
