07/29/2022

The Time is Right for Rental Companies to Include EVs

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4 MIN. READ

Fully electric vehicles are the next generation of ground transportation because of their many advantages over traditional internal combustion engine vehicles. Some are making the switch to protect the environment. Others look at the financial benefits an EV provides due to increasing fossil fuel prices and lower maintenance costs.

No matter the reason, it is clear the electrification movement is happening, and car rental companies are getting on board. The three major rental car companies, Hertz Global Holdings, Enterprise Holdings, and Avis Budget Group, have all announced they are adding fully electric vehicles to their lineups.

Hertz was the first out of the gate with the October 2021 press release that they will be purchasing https://www.bloomberg.com/news/articles/2021-10-25/hertz-said-to-order-100-000-teslas-in-car-rental-market-shake-up – xj4y7vzkg100,000 fully electric vehicles from Tesla Motors in a deal valued at $4.2 billion. In early 2022, Hertz announced that they will also be purchasing 65,000 fully electric vehicles from Polestar, a subsidiary of Swedish auto manufacturer Volvo. Shortly after Hertz’s initial announcement, their competitors made it known they will be expanding their EV fleet as well.

Why now?

Until recently, fully electric vehicles were not practical as a rental, mostly due to the lack of publicly available EV Level 2 and Level 3 chargers. Now, it is a common sight to see an EV chargers in parking garages, along the road partnered with traditional gas stations, at hotels, and at office buildings. The EV chargers will become even more common, as the Biden administration just announced to build a network of 500.000 EV chargers along America in support of this critical infrastructure.

During the pandemic, when air travel and other mass transit options such as trains were brought to a screeching halt for social-distancing concerns, those that still traveled turned to rental car companies not just for vacations but for business travel and critical infrastructure work. The rental companies were simultaneously able to reduce the number of vehicles in their fleets, which resulted in record profits. Now that the pandemic is more manageable and travel patterns for both leisure and business are returning to normal, the rental car companies need to boost the number of vehicles in their fleet, and EVs are appealing to many of the markets rental car companies serve.

Upgrading to any newer technology is an investment. There is an upfront capital cost, and you expect to make that back over the upgrade’s life. A fleet of EVs is no different. On top of the price of the new cars, an EV Charging Station will need to be installed, and the company’s team members will need to be trained in the difference between operating and maintaining EVs as opposed to traditional vehicles.

The unexpected profits during the pandemic, combined with the need to rebuild their fleets and the expanding access to the EV charging, make now the perfect time for these companies to incorporate EVs into their fleets.

Customers are asking for EVs

When most people think about rental car customers, they picture families on vacations or businesspeople traveling. While these groups make up a large part of the business, they are not the only customers of rental car companies. Rental companies also service and maintain fleets to other firms that are used locally. The types and needs of customers vary, and each benefit differently from EVs.

Leisure travelers who want to maintain social distancing are looking at rental companies as an alternative to flying to their destinations. These customers can realize financial savings by renting an EV for their road trip to offset the rising prices of fossil fuels. Other leisure customers consider renting an EV an opportunity to test the new technology while deciding if an EV is suitable for their next vehicle purchase.

Business travelers view renting EVs as a way to meet the company’s environmental, social, and corporate governance goals. Many organizations have said they will pay a premium to rent EVs. https://electrek.co/2022/06/26/buy-or-lease-electric-vehicle/Renting an EV is enticing to companies because it does not have the upfront price tag of many environmental upgrades and greatly impacts the environment.

An exciting business model that rental companies have developed in the past few years is renting vehicles to gig-economy drivers like Uber. Uber realized that the bottleneck to their growth wasn’t customers or willing drivers but the vehicles those ready drivers had access to.

Uber and Hertz made a deal wherein Hertz would supply and maintain cars for Uber drivers. These vehicles see heavier than normal use, resulting in higher maintenance costs compared to vehicles rented to their other customers. EVs don’t have an engine or other moving parts that are common in gas vehicles, so they require less maintenance.

The drivers of these vehicles see higher profit margins since the cost to “refill” or charge an EV is a fraction of the cost to refill a traditional vehicle. Since these customers are very familiar with the area, they know where to find an EV charging along their normal routes.

Other benefits for rental companies

The operating costs for rental companies across all markets are also reduced with EVs since there is no need to go anywhere to refill vehicles. Rental companies want drivers to return cars with full tanks of gas because of the logistical challenges to refill those vehicles, but, with Evs, that is no longer an issue. Installing EV chargers in the parking area allows vehicles to be charged on location.

Qmerit simplifies fleet electrification by helping fleets overcome the complexities of installation. We provide a simple and seamless installation experience with top-quality service you can trust, helping fleets budget and control costs while tracking every step of the process.

See how Qmerit’s expert team is ready to make your @Home EV charging installation simple, with guaranteed satisfaction and support. Contact us today.

Lowry Stoops President, Qmerit Network