The companies said Tuesday that Hertz would buy EVs from across GM’s four main brands in North America—Chevrolet, Buick, GMC and Cadillac. The first orders would be for Chevy Bolt EVs starting early next year, the companies said.
Car-rental companies have been ordering electric cars to differentiate their fleets and add to their premium offerings. It also helps them to burnish their environmental, social and governance, or ESG, credentials with investors.
Hertz expects to offer GM’s electric models across its business lines, including leisure customers, business travelers, corporate fleets and ride-share drivers, Chief Executive
said. Financial terms weren’t disclosed.
Hertz’s senior vice president of operations initiatives, said the purchase was in the multibillion-dollar range. Hertz said it typically purchases vehicles through asset-backed securitizations, a structure that allows it to raise funds at lower rates than if it were to issue its own debt as a corporate entity.
GM shares fell 5.6% Tuesday, a slide that began before the Hertz news. Hertz shares fell 2.1%.
For auto makers, rental-company demand is an opportunity to land bulk orders at a time when they are trying to scale up production of plug-in cars.
Last year, Hertz said it would buy 100,000 Teslas for its fleet, though the two companies initially disagreed over how quickly that order would be filled. The rental-car firm also last spring agreed to purchase 65,000 electric cars from Swedish auto maker Polestar.
The Tesla deal disclosed in late October sent the electric-car maker’s stock soaring, pushing Tesla’s valuation above the $1 trillion mark.
Hertz said Tuesday that it plans for one-quarter of its fleet to be electric by the end of 2024.
Avis Budget Group Inc.
and Enterprise Holdings Inc. have said they are planning to add EVs to their fleets.
At Hertz’s airport locations, the company has charged $30 to $35 more a day for Teslas than the average rate for premium rentals, Mr. Scherr told analysts during a July conference call.
Selling EVs to Hertz could help GM hit the ambitious sales targets that it has outlined to investors.
GM Chief Executive
said early this year that the company expects to sell 400,000 EVs in North America by the end of 2023, more than 10 times the number it has sold annually in recent years. GM has said it aims to sell one million EVs in North America in 2025 as it rolls out more models.
president of GM North America, said he hopes that a Hertz customer who rents an EV will like it and buy one later. “It’s a try-before-you-buy sort of situation,” he said during a media briefing.
Mr. Carlisle said GM’s profit margin on its EV sales to Hertz would be closer to the margin it gets on retail sales. Historically, auto makers’ sales to rental firms have been steeply discounted.
GM resumed Bolt sales in the spring after taking the vehicle off the market last year while the company worked to fix a battery defect that led to a recall of all of the 142,000 Bolts it had made since the vehicle’s debut in 2016.
Last spring, GM cut the Bolt’s price by about $6,000, bucking a trend of price increases for many EVs on the market. GM executives have said they wanted to offer an affordable option for mass-market EV buyers.
While rental companies are able to charge more for electric vehicles, they also typically cost more than gas-powered vehicles, adding to upfront costs. Also, a lack of electric chargers in many locations could complicate the experience for customers, analysts and executives have said.
Write to Mike Colias at [email protected]
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