What Is The Role Of Car Rentals in EV Revolution?
With climate changes and global warming, electric automobiles are the preferred alternative for environmentally friendly transportation. For the same reason, US President Joe Biden declared that by 2030, half of the new car sales would be electric. As a result, electric cars are the way of the future. However, electric vehicles account for just 2% of new car sales currently.
Against this backdrop, Hertz announced on October 25th that it would purchase 100,000 Tesla Model 3s. These vehicles are for the company’s consumer rental fleet, with almost half of them going to Uber drivers. This announcement has sparked a surge in the electrification of rental fleets. The challenge now is how to proceed to make this venture a success.
During the International Car Rental Show, which commenced on August 17th, a council of EV specialists shared facts and thoughts on the EV market’s near future. It also reviewed the hardships and concerns that automobile rental companies would encounter while renting EVs.
The Electric Future Of Automobiles
The more significant shift in EV sales has a favourable influence on the policy framework in the United States. According to Chris Haffenreffer, assistant vice president of innovation at Enterprise Holdings, the rules and regulations in the European operations provide a favourable environment for EV transition. He expects to see such supporting measures from all levels of government in the United States, too.
To facilitate the use of EVs, an infrastructure to support the charging of these cars is also required. Matt Daus, the partner at Windels Marx Lane & Mittendorf and transportation technology chair at CUNY’s Transportation Research Centre, believes that the government should develop a synchronized plan for creating an EV-friendly infrastructure, including how and where to invest the money. He wants to see a practical strategy for placing charging stations on highways or airports so that rental vehicle firms may utilize them.
Test Drive EVs
Automobile companies are now investing billions of dollars in the development of new electric cars. However, these expenditures will be nothing if consumers are unwilling to purchase them. Before aiming for half of the market share for EV sales, customers need to be more interested in purchasing EVs.
According to Jose Blanco, group chief sales officer of Europcar Mobility Group, the function of car rentals is useful in generating customer interest. Allowing consumers to test out electric vehicles through the car rental stream is a terrific approach for car manufacturers to directly introduce these vehicles to consumers. According to polls, testing out new cars increases the likelihood of adopting such vehicles as their next vehicle, in this case, EVs.
The majority of car rental companies are already expanding their green vehicle fleets. Europcar launched a new initiative last year to help reorganize its company and meet new requirements and standards. Connect was the name given to it. By the end of 2023, the firm plans to have one-third of its fleet converted to green cars such as EVs, plug-in hybrids, or hybrids.
Enterprise Holdings, according to Haffenreffer, is following Europcar’s lead in adding more EVs over the next decade. For this shift, he feels that they must completely grasp the course of the market ahead and the demands of the clients. Building the correct market alliances, he believes, is crucial but also a complex problem since legislators, energy companies, charging businesses, and OEMs all have a role to play.
According to Haffenreffer, Enterprise has been focused on European market data to analyze the EVs’ effect on the market and the consumers’ perspectives to have a complete grasp of the aforementioned. Enterprise already has thousands of EVs under its many brands.
Constraints With EVs
With today’s prevalent infrastructures, one of the most obvious constraints for EVs is the process of charging these vehicles.
It is vital to determine how the firms will charge these vehicles—will they rely on local public charging stations or invest in developing their own charging infrastructure? If they choose the latter, they must research the charger varieties to acquire.
According to Arun Kumar, managing director of AlixPartners Automotive & Industrial Practice, a level two charger takes 6-12 hours to fully charge a car. As a result, if a vehicle rental company wants to expand its EV fleet, it must upgrade to fast charging alternatives since it is not possible to charge a car for 6 hours and then rent it out again.
The second barrier is vehicle depreciation, an essential component of a car rental business plan. Blanco stated that depreciation and EVs in automobile rental are major concerns. To him, predicting the future with a monthly evolving technology is unreliable.
According to Kumar, determining the depreciation curve is challenging because more automobile manufacturers are developing different EV models, each of which has another technology, mileage, range, and so on. As a result, things will be more difficult for the auto rental industry for a few more years until things stabilize down in terms of new models and customer demand, and to make EV rentals economical, charging complications must also be addressed.