Hertz has announced it will buy 100,000 electric vehicles from Tesla, one of the largest purchases of battery-powered cars in history and the latest evidence of the US’s increasing commitment to EV technology.
The purchase by one of the world’s leading rental car companies reflects its confidence that electric vehicles are gaining acceptance with environmentally minded consumers as an alternative to vehicles powered by petroleum-burning internal combustion engines.
In an interview with the Associated Press (AP), Mark Fields, Hertz’s interim chief executive, said that Teslas are already arriving at the company’s sites and should be available for rental starting in November.
Hertz said in its announcement that it will complete its purchases of the Tesla Model 3 small cars by the end of 2022.
It also said it will establish its own electric vehicle charging network as it strives to produce the largest rental fleet of electric vehicles in North America.
Mr Fields would not say how much Hertz is spending for the order.
But he said the company has sufficient capital and a healthy balance sheet after having emerged from bankruptcy protection in June.
The deal is likely to be worth around four billion dollars (£2.9 billion) because each Model 3 has a base price of about 40,000 dollars (£29,000).
It also ranks at the top of the list of electric vehicle orders by a single company.
In 2019, Amazon ordered 100,000 electric delivery vans from Rivian, a start-up manufacturer of electric vans, pickup trucks and SUVs.
Amazon is an investor in Rivian.
Shares of Tesla hit an intraday record on Monday before pulling back slightly.
They were up 7% to 973.85 dollars by mid-morning.
The share price increase boosted the market value of Tesla, the world’s most valuable carmaker, to just over 900 billion dollars (£653 billion).
In his interview with the AP, Mr Fields made clear his belief that electric vehicles are increasingly moving into the mainstream and that Hertz intends to be a leading provider of EVs to rental customers.
He pointed to surveys showing that over the past five years, consumer interest in electric vehicles has grown dramatically.
“More are willing to try and buy,” he said.
“It’s pretty stunning.”
Mr Fields said that Hertz, which is based in Estero, Florida, is in discussions with other carmakers too about buying additional electric vehicles as it expands its EV fleet as more models enter the marketplace.
Hertz is also investing in its own charging network.
Mr Fields said it has plans for 3,000 chargers in 65 locations across the United States by the end of 2022 and 4,000 by the end of 2023.
Many of the sites will be at Hertz locations such as airports, he said, while others will be in suburban areas.
Customers would also be able to use Tesla’s own large charging network for a fee, Mr Fields said.
The company has a network of about 25,000 chargers worldwide.
Mr Fields declined to say how much Hertz will charge to rent the Teslas or whether they would be more expensive for customers than gas-powered vehicles.
Daniel Ives, a technology analyst at Wedbush Securities, wrote in a note on Monday to investors that Hertz’s order represents a “major feather in the cap” for Tesla and shows that a broad adoption of electric vehicles is under way “as part of this oncoming green tidal wave hitting the US”.
China and Europe have been ahead of the US on vehicle electrification.
But demand in the United States is accelerating, Mr Ives noted, with Tesla leading the way, followed by start-up Lucid Motors, General Motors, Ford and others that are chasing a potential five trillion dollar market opportunity over the next decade.
Hertz Global Holdings filed for bankruptcy protection in May 2020, two months after coronavirus erupted across the country.
It was among the first major corporations to be felled by the pandemic as infections surged and shut down travel on a global scale for both companies and tourists.
In October, Hertz named Mr Fields, a former Ford Motor Company CEO, as its interim chief executive.
