Hertz, which filed for Chapter 11 bankruptcy protection early in the COVID-19 pandemic, says it plans to buy 100,000 cars from Tesla by the end of 2022 in a shift toward electric vehicles.
That matches the 100,000 electric vans that Amazon has ordered from start-up Rivian as the largest electric vehicles order ever.
The deal is worth about $4.2 billion, Wedbush Securities analyst Dan Ives estimated.
Hertz said it would provide Tesla Model 3 compact cars for rent at airport and neighborhood locations in major markets and certain European cities beginning in early November.
Teslas will make up more than one in five Hertz vehicles worldwide, though the company said that a global microchip shortage could limit the availability of vehicles.
Hertz also plans to install thousands of electric vehicle charging stations at its locations.
The moves represent the largest investment by a rental car agency in technology widely considered the future of the automotive business but still viewed with caution by many Americans worried about running out of battery power while driving.
It’s also a concrete sign of where interim CEO Mark Fields, a former CEO of Ford Motor Co., plans to take Hertz as the rental car agency tries to reinvent itself.
And it comes as rental car companies are starved for vehicles, having sold off big chunks of their fleets in 2020 to conserve cash when travel slowed to a halt as the coronavirus began to spread.
With limited fleets, prices for rental cars have skyrocketed across the industry as demand picked up.
Fields said the company chose Tesla because of its market dominance in EV sales. But he said the company isn’t forming an exclusive relationship with Tesla and that it will also buy EVs from other automakers.
“It is just the start for Hertz,” Fields said. “We’re very much now looking to the future.”
He wouldn’t discuss pricing for Tesla vehicles. Most of them will be Model 3s, but the fleet will include other Tesla vehicles as well, he said.
But will customers feel comfortable that they won’t run out of battery power? That condition, common among EV skeptics, is known as range anxiety.
That’s why Hertz is installing charging stations at its locations in about 65 markets by the end of 2022 and more than 100 by the end of 2023, Fields said.
“We want to make customers feel not anxious about range anxiety and that they can charge their vehicles,” he said.
Renters also will have access to Tesla’s network of more than 3,000 dedicated charging stations, known as Superchargers.
The company also said that it has hired NFL star Tom Brady to help market its EV push.
Hertz, which recently announced plans to go public, introduced EVs into its fleet in 2011.
Ives, the financial analyst, said the Hertz purchase could have a big impact on Americans’ adoption of electric vehicles.
“While Hertz is in the early stages of electrifying its rental car fleet, Tesla getting an order of this magnitude highlights the broader EV adoption underway in our opinion as part of this oncoming green tidal wave now hitting the U.S.,” Ives wrote, calling the deal a “major feather in the cap” for Tesla.
Read more at USA Today.
