The car rental industry is rushing towards the transition to electric vehicles


Although automakers and governments around the world are poised to invest billions of dollars in the development of electric vehicles and the required infrastructure, the transition from internal combustion engine vehicles to zero electric vehicles broadcast will take some time. Electric vehicles are still too expensive for the average consumer, and with the global economy declining, expensive electric vehicles will be the last thing on many people’s minds.

Fleets, on the other hand, are not constrained by many factors that prevent lone drivers from switching to electric vehicles in the short term. As such, fleet managers such as the billion-dollar car rental industry could form the bulk of early mass users of electric vehicles. Last October, for starters, car rental company Hertz sent shockwaves through the nascent electric vehicle industry when it announced a massive $4.2 billion deal that would see it buy 100 000 battery electric vehicles to Tesla by the end of 2022.

Hertz isn’t the only car rental company dreaming of electrification. Avis Budget Group and Enterprise Holdings, its two main competitors, also plan to electrify their fleets. Enterprise Holdings announced last June that it had purchased 100 plug-in electric vans and would offer them for daily and longer-term rental. Late last year, Avis Budget Group saw its stock more than triple after announcing it would start adding electric vehicles to its fleet in the near future.

However, American Car Rental Association President Sharky Laguana warns that the transition from combustion car fleets to electric vehicles will be a marathon, not a sprint. Even as companies want to electrify their fleets as quickly as possible, she says several challenges stand in their way.

For starters, Laguana says, ongoing supply chain disruptions, particularly the global chip shortage, have drastically curtailed production and reduced the supply of new cars. The industry bought just 750,000 vehicles from original equipment manufacturers (OEMs) in 2021, compared to 2.1 million units in 2019.

Car rental companies will face limited public charging infrastructure at offices, airports, hotels, resorts and along minor and major roads. The US Department of Energy’s Alternative Fuels Data Center estimates that there are currently more than 46,000 public charging stations in the country. According to EVgo CEO Cathy Zoi, the United States will need at least one million public EV chargers to support a massive transition to electric vehicles and drive sales for all EV manufacturers, including Rivian Automotive Inc. (NASDAQ: RIVN).

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