The electric vehicle revolution is transforming rental companies

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Following a huge increase in electric vehicle (EV) investment over the past year, with many major automakers announcing their electrification plans, rental companies around the world are starting to make the switch. As governments launch green energy strategies to curb the sale of conventionally fueled vehicles in favor of cleaner alternatives, and energy companies invest in widespread charging infrastructure, consumers are becoming more open electric vehicles that rental companies are about to supply.

Over the past year, automakers from Volkswagen to Nissan to Toyota have all announced new electric vehicle models as they pick up the pace of electrifying production. As major powers around the world aim for an energy transition that will help them achieve net-zero carbon emissions by 2050, automakers have realized that the only way to long-term success is to develop more environmentally friendly vehicles. ‘environment. While the consumer market for electric vehicles remains small at present, increased investment in the early development of batteries and other electric vehicle components will help automakers eventually produce lower-cost cars that will appeal to the grassroots. of growing consumers.

In response to increased production and consumer interest in electric vehicles, rental companies are beginning to acquire fleets of electric vehicles in favorable markets. The effects of Covid on the car rental industry have supported this shift as many companies have been forced to sell vehicles as demand has plummeted, encouraging many to adopt electric vehicles for their new fleets. While buying new cars as business picks up isn’t so straightforward, supply chains are still being hit hard by pandemic-related restrictions and delays.

With the outlook looking very different from the pre-pandemic era, rental companies are now looking to innovate and adapt to future consumer demands. Hertz rebounded from its 2021 bankruptcy with a bold statement that it would invest $4.2 billion to purchase 100,000 Tesla electric vehicles by the end of 2022, as well as 65,000 electric cars from Polestar. Hertz hopes electric vehicles will make up more than 30% of its U.S. fleet by the end of 2024. The impressive move has led other rental companies, such as Enterprise Holdings and Avis Budget Group, to announce similar goals. , moving away from the internal combustion engine. vehicles (ICE).

However, these grand ambitions are not without challenges. There is no quick way to convert a large international fleet of ICE cars to electric. Rental companies need to consider several barriers to the deployment of electric vehicles, including different levels of consumer demand in different markets, available charging infrastructure, and the availability of electric vehicles themselves.

But despite the challenges, Hertz and other rental companies believe the long-term investment needed to go electric will be well worth the cost and hassle. Hertz will primarily target its electric vehicle fleet to corporate drivers, as reducing carbon emissions will help companies achieve their environmental, social and governance (ESG) goals. Chris Woronka, an analyst at Deutsche Bank, explains: “Initial research has shown that corporate accounts would be willing to pay a premium for electric vehicles…as it helps them achieve some of their ESG goals. Not to mention the current cost of gasoline, which already makes electric vehicles more attractive for many categories of consumers.

But with the electric vehicle market still in its infancy, it might not be easy to go rent an electric option anywhere. In 2021, electric vehicles accounted for less than 1% of American cars, accounting for about 3% of cars and trucks sold last year. And rental car companies that have not yet established purchasing partnerships with EV manufacturers risk serious delays in accessing EVs as the consumer EV market expands and Supply chain disruptions lead to further delays.

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But Teslas and other electric vehicles are already available through rental and subscription services in major markets, such as the United States and Canada. Craig Hirota, Vice President of Government Relations and Membership Services at Associated Canadian Car Rental Operators (ACCRO) explained, “Public perception and awareness of electric, zero-emission and hybrid vehicles is growing every month and there are definitely a lot more. consumer curiosity about these types of vehicles. This means it is important to equip rental and subscription companies with a fleet of electric vehicles, preparing them to meet growing consumer demand.

And smaller rental companies are gaining popularity by marketing themselves as electric vehicle specialists. For example, in Vancouver, car rental company EV Rentals changed its name to Zerocar in 2021, with a fleet of 50 Teslas, giving customers rental options starting at $8 an hour. Thanks to growing interest, it plans to triple its fleet by 2023. Other used electric vehicle companies in Canada are testing rental programs with great success. Meanwhile, electric vehicle car-sharing companies, such as Communauto, Modo and Turo, are also popping up across the country.

As interest in electric vehicles grows worldwide, with the rise of the environmentally conscious consumer, car rental and subscription services will need to prepare to meet the demand if they are to remain relevant. . Although, as we are seeing industry-wide, Covid supply chain disruptions and the inadequate pace of battery component mining may limit this near-term growth.

By Felicity Bradstock for Oilprice.com

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