As the demand for electric vehicles (EVs) rises, renting one might seem like an affordable option for potential buyers to test out this new technology. However, recent developments suggest that finding an EV for rent may soon become significantly more difficult. This is primarily due to the financial strains EVs have placed on rental companies, most notably Hertz, which has scaled back its ambitious plans to acquire 100,000 Teslas due to unexpectedly rapid depreciation in their resale value.
Hertz’s experience has reverberated across the rental industry, causing many companies to sell off their EVs at deep discounts. Consequently, the influx of electric cars into rental fleets has slowed considerably. According to S&P Global Mobility, the percentage of electric cars sold to rental companies dropped from over 4% last year to just 1.4% this year.
Renting an EV offers consumers an opportunity to familiarize themselves with these environmentally friendly vehicles, which produce no tailpipe emissions. Yet, despite the potential for rental companies to influence consumer behavior and promote EV adoption, the industry faces numerous challenges that hinder this progress.
One of the primary hurdles has been the logistical difficulties associated with maintaining EVs. Many airport rental complexes lack sufficient charging infrastructure, and renters often underestimate the rapid acceleration of EVs, leading to more frequent accidents and higher insurance premiums. Additionally, procuring spare parts for EVs has proven more difficult than for traditional gasoline-powered vehicles.
The most significant financial challenge for rental companies has been the rapid depreciation of Tesla cars. Tesla’s decision to cut prices on new models to boost sales has led to a sharp decline in the resale value of used Teslas. A recent study by iSeeCars.com indicated that used EVs have depreciated faster than their gasoline counterparts, leading to substantial financial losses for rental companies that rely on high resale values to maintain profitability. For Hertz, the diminished value of its electric fleet contributed to a $195 million reduction in profit in the first quarter of the year.
Despite these challenges, some rental companies remain committed to integrating EVs into their fleets. Enterprise Mobility, for instance, continues to offer thousands of electric vehicles across the United States, Canada, and Europe and is investing in expanding charging infrastructure to support their customers. This commitment highlights a long-term strategy to accommodate the growing market demand for EVs.
However, for consumers unfamiliar with EVs, renting one can present a steep learning curve. Rental companies often lack the resources to provide comprehensive tutorials on operating these vehicles. Hertz, for example, relies on online resources and email instructions to educate renters.
Refueling also poses a significant challenge. Rental companies generally expect EVs to be returned with a 70% charge, requiring renters to find charging stations near the end of their trips. This can be inconvenient, particularly at airports where charging infrastructure is limited. Moreover, the availability of fast chargers varies by location, complicating matters further for renters in less urban areas.
Despite these obstacles, industry experts believe that the increasing popularity of EVs will eventually compel rental companies to adapt. The broader adoption of electric vehicles is inevitable, and the rental industry will need to follow suit to meet consumer demand.