If you’ve been wanting to try an electric vehicle, renting can be an affordable option. But finding one may soon become much more difficult.
Electric vehicles have been financially disastrous for rental companies, especially Hertz, which in January scaled back plans to acquire 100,000 Teslas after the cars’ resale values plunged much faster than the company had expected.
Hertz’s experience had a chilling effect on its industry, and many rental car companies are now trying to sell off electric vehicles at deep discounts. And it may be a while before they start buying again.
Last year, more than 4 percent of the cars sold by manufacturers to rental companies were electric, according to S&P Global Mobility. So far this year, that number is just 1.4 percent.
In theory, renting an electric car is a great way for people to try and become comfortable with new types of vehicles like battery-powered cars that produce no tailpipe emissions. “The potential that rental companies can have in reshaping consumer behavior and helping to promote adoption is critical,” said Stephanie Valdez-Streaty, the director of industry insights at Cox Automotive. “But there’s a long way to go.”
Ms. Valdez-Streaty said rental firms had recently been offering good deals on electric vehicles, but those were unlikely to last as the companies thinned their fleets of such cars.
Hertz and other rental car companies found that offering customers electric vehicles at a profit was more difficult than they had expected. Most rental car complexes at airports lacked chargers. Many renters were not prepared for how quickly electric cars accelerated, leading to more accidents and higher insurance premiums. And some companies found they couldn’t get spare parts for such cars as quickly as they could for gasoline cars.
“They thought E.V.s would be more simple and straightforward and cheaper to maintain,” said Karl Brauer, an executive analyst at iSeeCars.com, an online car search site. “They’re finding that’s not true.”
In a statement, Hertz said it would “continue to offer our customers the widest possible choice of vehicle makes and models, including electric vehicles.”
The biggest problem for the rental companies was the rapid depreciation of cars made by Tesla, the leading manufacturer of electric cars. The company, led by Elon Musk, sharply cut prices on new models last year to prop up sales. That pushed down the prices for used Teslas. A study released last month from iSeeCars.com found that used electric vehicles have lost value faster than the average used gas car has this year and, in May, cost less on average than used gasoline cars for the first time.
Resale values are a critical part of the financial calculus for rental companies because they generally sell cars before they accumulate too many miles. Rental car companies record losses when they sell cars for less than they had expected to. In the first three months of the year, the diminished value of Hertz’s electric fleet lowered its profit by $195 million.
Rental companies “are 100 percent dependent on residual values,” said Shay Natarajan, a partner at Mobility Impact Partners, a private equity firm that invests in sustainable transportation. “It’s just a very difficult business model.”
James Iovino, who lives in Baldwin, N.Y., listed about nine electric vehicles on the car sharing website Turo. But he got out of the business a month or so ago after E.V. prices dropped.
“I got burned for the same reason Hertz got hurt — Elon Musk opens his mouth and the industry takes a dive,” he said.
But some rental car companies say they are not dumping battery-powered cars because of the recent drop in prices.
Enterprise Mobility has several thousand electric vehicles available in the United States, Canada and Europe, and will add more depending on market demand, said Mike Wilmering, a spokesman for the company. Enterprise is also working on making more chargers available to its customers.
“We’re looking beyond how many chargers are available and working to identify power needs and access — both in our locations and the communities we serve,” Mr. Wilmering said. “We want customers to have a great experience with E.V.s, and we’re keeping them at the center of our long-term strategy.”
Some people who have never driven an electric vehicle face a steep learning curve when they are given a battery-powered car. Rental companies typically do not have the staff to give customers a tutorial. Hertz, for example, offers information online for electric vehicle renters and sends them instructions by email.
Tom Moore and his wife rented a Tesla from a Hertz location in Portland, Ore., last year as a test run for buying an electric car.
His wife, who did the bulk of the driving, asked a Tesla-owning neighbor back home in Mountain View, Calif., for a lesson before their trip. It was a good idea — the Hertz employees did not offer any instructions before handing over the key fob.
“They just said, ‘This is your parking place,’” Mr. Moore said.
Hertz said it “learned a lot as a first mover in the E.V. rental market, and, as we align our fleet with consumer demand, we’re focused on continuously enhancing the rental experience, which includes making it easy and rewarding for all customers.”
Refueling has been another issue. Many rental companies expect customers to recharge electric vehicles to around 70 percent before returning them. That means customers must plan to stop at a charger near the end of their trips, which is not always easy to do when people are trying to catch flights and there aren’t enough fast chargers near the rental car center.
Rental companies don’t want to be responsible for charging because they like to get cars back on the road quickly. It can also be difficult for rental companies to install chargers at airports.
“Airports are notorious for being unfriendly for electric infrastructure development,” said Raghu Iyengar, an executive at Volkswagen of American whose duties include sales to rental companies. Demand from rental companies for Volkswagen’s ID.4 electric sport utility vehicle has been close to zero, he said.
People who rent Teslas have access to its Supercharger network, the largest fast-charging system in the United States. But most Superchargers work only with Tesla cars. People who rent cars made by automakers like Kia, General Motors or Polestar must use chargers offered by other operators, each with its own mobile phone app for payment. Renters also need to be aware that there are few or no fast chargers in many parts of the country, especially in rural areas.
But even in the heart of the technology industry, driving a rented electric car can be difficult.
Kerry Dietz, a retired architect who lives in Springfield, Mass., reserved the “manager’s special” last year at Thrifty Car Rental, which belongs to Hertz, during a trip to Berkeley, Calif. She owned a Tesla at the time and was no stranger to electric driving. But Thrifty gave her a Polestar, a car designed in Sweden and manufactured in China that was not able to use Tesla’s charging network.
“I spent the entire time we were there trying to find a place to charge — a place to charge where stuff worked,” Ms. Dietz said. “It was a really frustrating experience.”
As electric vehicles become more popular, rental companies will have to figure out how to offer them, Mr. Iyengar of Volkswagen said. “There’s going to be an electric tide that lifts all boats,” he said, “and rental is going to follow that.”
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