With President Biden’s recent goal of making 50% of all new vehicle sales electric by 2030, electric is the future. However, electric vehicles (EVs) only account for about 2% of new vehicle sales today.
And in this context, Hertz made a splash on October 25 when it announced its intention to buy 100,000 Tesla Model 3 for its consumer rental fleet, with up to 50,000 units for rent to Uber drivers.
With this news, the electrification of rental fleets has left the starting gate – with many questions about how to make the business successful.
During the closing speech of the International Car Rental Show, convened on August 17, a panel of EV experts shared their thoughts on the near future of the EV market as well as logistics and challenges for businesses. trying to rent EVs.
The future of electric vehicles
The goal of increasing sales of electric vehicles shows a change in the political environment in the United States.
“In our European operations, we find that the political and regulatory environments are very favorable to the transition of electric vehicles, whether through incentives, emission regulations or restrictions on internal combustion engines”, said Chris Haffenreffer, assistant vice president of innovation at Enterprise Holdings. . “I think we’re going to start to see this type of action in the United States at all levels of government.”
To support all these new models of electric vehicles, a charging infrastructure must be available.
“I think there has to be a coordinated government plan for how the money will be spent and where it will be spent to increase infrastructure,” said Matt Daus, partner at Windels Marx Lane & Mittendorf and chairman of transportation technology at CUNY’s Transportation Research Center. “There needs to be a mobility plan for the location of charging stations, including on highways or whether they will be installed at airports for rental car companies to use.”
Car rental: Electric road test
To start targeting 50% electric vehicle market share, consumers need to be more interested. Currently, automakers are investing billions of dollars in the creation of new electric vehicles, but will consumers want to buy these new vehicles?
“In my opinion, this is where car rental comes in,” said Jose Blanco, Europcar Mobility Group sales manager. “Putting people in the seats through the rental car channel is a great way for automakers to make sure people try out these new vehicles. We have found in our surveys that when consumers try them, the likelihood of them buying the next electric vehicles is much higher. “
Some rental companies have focused on adding greener vehicles to their fleets. Last year, Europcar launched a new program called Connect to help reshape its group and its new needs and regulations. According to Blanco, the company expects green vehicles (electric, plug-in hybrids or hybrids) to make up a third of its entire fleet by the end of 2023.
Enterprise Holdings will make the transition to add more electric vehicles over the next decade, according to Haffenreffer. “In order for us to make this transition, we need to make sure we understand where the market is heading and what our customers are telling us. We want to build the right partnerships in the market. It’s a complex issue where policymakers, utility companies, charging companies and OEMs all have a seat at the table.
Additionally, Haffenreffer said Enterprise is tracking data in Europe to better understand the impact EVs will have on their business model and customer experience.
Currently, Enterprise has several thousand electric vehicles in its various brands.
One of the challenges of maintaining rental electric vehicles is the process of recharging the vehicles. Will the rental company rely on nearby public charging stations to charge vehicles? If they have their own charging infrastructure, what kind of chargers will they invest in?
“If you only have level two chargers, it can take six to 12 hours to fully charge a vehicle,” said Arun Kumar, general manager of AlixPartners Automotive & Industrial Practice. “From an operational standpoint, as rental companies charge their fleets of electric vehicles, they will have to move towards some kind of fast charging. You cannot let the car charge for eight hours to rent it again. “
Another challenge is depreciation. For rental companies, vehicle depreciation is an important part of the business model.
“When we discuss depreciation and EVs in car rental, we tend to get a little nervous,” Blanco said. “It is difficult to project into the future. What is the value of a technology that changes every month? “
“As more and more car manufacturers offer more and more models of electric vehicles, it will be difficult to predict what this damping curve will be, as each vehicle has different technology, mileage, etc.,” he said. Kumar said. “I think the rental challenge is going to be even more difficult over the next few years before things take hold in terms of new models and consumer interest, and possibly on the charging side which needs to be corrected before you can make it profitable to lease EVs.