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Hertz EV Deal Could Accelerate EV Adoption
By Justin Kuepper
Sep 22, 2022
Sep 22, 2022
Hertz Global Holdings Inc. (HTZ) agreed to buy up to 175,000 electric vehicles from General Motors Co. (GM) earlier this week. The two companies expect deliveries to begin early next year with the Chevrolet Bolt and the Bolt EUV. Eventually, they will include new models from other GM brands, including Cadillac and BrightDrop.
The move also follows a deal with Tesla Inc. (TSLA) last October to buy 100,000 EVs and have them on the road by the end of the year. While that deal is behind schedule, Tesla vehicles already make up about ten percent of the rental car company's fleet. The company's goal is for 25% of its fleet to be electric by 2024.
Accelerating EV Adoption
A 2015 Enterprise Holdings survey found that one in four customers that had a great experience while renting a car considered buying one. Moreover, almost two-thirds of customers said they considered buying the specific model of the vehicle they rented. And nearly 70% changed their minds about a car model after a rental experience.
Hertz's move to add new GM EVs to its fleet could get millions of Americans behind the wheel of an EV for the first time. If they have a positive experience, Hertz could convert legions of rental car customers into long-term EV owners. And since most rental car users have short commutes, range anxiety shouldn't be a significant factor.
According to a study published in Sustainability, the willingness to buy an EV increased after a short test drive. Test driving helped potential customers grow their knowledge of electric cars, evaluate the reliability of the battery and range, and experience the comfort of an EV driving experience, among other factors.
The biggest challenge for Hertz and the potential for the move to drive EV adoption is charging infrastructure. While Tesla's Supercharger network is highly dependable and ubiquitous, the charging infrastructure is far less mature for other EVs, such as GM's models, Polestar, and other companies.
The good news is that the Biden administration has already earmarked about $7.5 billion to spend on EV infrastructure as part of the bipartisan infrastructure bill passed last year. Moreover, Hertz has already installed more than 1,400 chargers at its facilities and plans to add another 2,600 next year. And GM recently partnered with EVgo Inc. to build 2,700 fast-charging stations nationwide by 2025.
Another challenge could be taking delivery of the vehicles. The combination of microchip shortages, pent-up demand for new cars, and surging interest in EVs has made it challenging to acquire new vehicles. And as the deal with Tesla demonstrates, delays will be inevitable as long as these supply chain issues pesist.