With the announcement, this week that it will acquire 100,000 Tesla vehicles for a reported $4.2 billion, auto rental giant Hertz sent the strongest indication to the markets that it had emerged from bankruptcy. Two days later, Hertz made news again when it announced that Uber had agreed to rent up to half of the order to its drivers. Tesla, on the other hand, may emerge as the deal’s greatest winner, as it can use its first-to-rental market edge and the inventory limits that other automakers face to possibly grab a growing pool of EV-curious customers.
The first thing that stands out is the deal’s size, which is unprecedented for EVs, according to Ivan Drury, an auto industry expert with Edmunds.com. “[Rental car firms] aren’t buying a lot of electric vehicles,” he explained. “We’re not talking about regular fleet sales in bulk.” (Hertz, Enterprise Holdings, and Avis Budget Group have all declined to say how much of their fleet is electric.) “For Hertz to go ahead and acquire 100,000 [Teslas], but on top of that, 50,000 are allocated for Uber drivers — that’s a whole different dynamic than we’ve ever seen from rental firms,” he continued.
The transaction — which CEO Elon Musk confirmed was for sticker price — is also a strong indication that Tesla is on track to complete a large order of Model 3s before the end of next year. Meanwhile, traditional manufacturers may stymie by a backlog of EV reservations for new consumers, according to Michelle Krebs, an analyst at Cox Automotive. “During the epidemic and following chip and vehicle inventory crisis, automakers focused on retail sales to customers rather than selling to rental car fleets,” she added.
The benefits are not just financial. According to a 2015 poll conducted by Enterprise Holdings, the parent company of Enterprise Rent-A-Car, National Car Rental, and Alamo Rent-A-Car, almost 62 percent of respondents stated a favorable rental experience with a certain model prompted them to consider owning one. In the traditional rental car business, EVs have been unable to capitalize on this potential customer demand. Until far, companies have mostly filled in the gaps for consumers wishing to hire an electric vehicle for their vacation. Future and Next move are two words that come to mind while thinking about the future. Rent specializes in electric-only rentals in Germany, whereas Turo, a peer-to-peer automobile rental marketplace in the United States, provides a mix of electric and internal combustion engine models.
According to Turo, a peer-to-peer renting platform, there is a need. The number of Teslas available for hire on Turo has increased dramatically in the last five years, according to the business. Turo’s marketplace had 67 Teslas listed in 2014; so far, in 2021, that number has risen to 21,599. Over the same time, the number of electric vehicles climbed from 196 to 26,956.
Many Tesla owners who advertise their vehicles on Turo claim that their vehicles hired for lengthier test drives rather than for journeys. “The hour that you have sitting in a Tesla [for a test drive] isn’t enough for a lot of people,” a Turo representative remarked. “Some potential purchasers are concerned about range anxiety and want to test drive a Tesla for long-distance travel. Many of our hosts tell us that visitors have enjoyed renting Teslas on Turo since they can truly call it their own for a long length of time.” According to Krebs, the market for Tesla rentals at Hertz will include not just traveling Tesla owners, but also individuals who wish to test drive a Tesla and perhaps “EV inquisitive” consumers.
“It’s a terrific marketing opportunity for Tesla,” she noted, noting that the company does not buy advertising. “Instead, Hertz is handling the promotion, and Tesla is riding on the coattails of 7-time Super Bowl Champion Tom Brady.” While Tesla does not employ traditional advertising to sell its automobiles, it’s worth remembering that Musk has 54 million Twitter followers and has demonstrated his ability to keep his name (and that of his firm) in the news. Automakers frequently utilize rental car businesses as marketing tools to push their most-loaded models, according to Drury. “As a result, this becomes a test drive facility for Tesla.”