Hertz And EV's
A Different Take
Hertz is getting out of the EV business. They will sell 20,000 EVs that they had purchased. Under pressure from the Biden Administration, and from green activists, they bought EVs and added them to the fleet. They received subsidies to purchase them.
Last week with the cold snap, EVs got a lot of bad publicity in places like Chicago where the battery life was cut tremendously. People couldn’t get home from work, and the charge time was forever.
Critics of electric vehicles are gleeful.
You can buy a battery heater and you won’t have a problem. Gasoline and diesel-powered owners have purchased heaters for years in cold weather climates. In some Alaskan cities, you can even plug your car in in public parking spots to keep it warm.
The real problem with EVs is the government subsidies. That’s caused a lot of bad EVs to be made. If you do an honest comparison of EVs, Tesla far and away makes the best cars, with the best range, with the best features, at the best price. It’s not close.
EVs have some benefits. They are quiet. There is no exhaust pollution. Cities and states can treat pollution at a centralized power plant. There are no catalytic converters for thieves to steal. EVs can be great for short commutes in suburbs and cities.
They have negatives too. They pollute as much as gas/diesel vehicles when you total all the costs from mining and building batteries to recycling and disposal of them. They go through tires faster, and because they are heavier there is more wear and tear on public infrastructure. There is no free lunch. There NEVER is despite what people say.
EVs aren’t going to save the planet, assuming the planet even needs saving.
However, let’s skip the politics and look at the business instead. Hertz should never have gone into the EV business, but that doesn’t make EVs bad.
I rented a car from Hertz recently. When I dropped off my gasoline car, a Tesla was being dropped off in front of me. I asked the renter, “How was it"?” He said, “Not great.”
“Why?”, I asked.
“Because I had to turn it in at a minimum of 70% charged.”, he said.
Think about that. Whenever you rent a car, it always has a full tank of gas and you return it with a full tank, or pay a penalty. That’s easy to do, and speedy.
I assume an electric car is only 70% charged when you pick it up. Someone can correct me but if it’s full, and only has to be brought in at 70%, there is a huge bullwhip kink in operations.
There is another problem. Time. When you rent an electric car, how do you charge it to 70% before turning it in? It’s not as if charging doesn’t take time.
From Pod Point:
A typical electric car (60kWh battery) takes just under 8 hours to charge from empty-to-full with a 7kW charging point.
Most drivers top up charge rather than waiting for their battery to recharge from empty-to-full.
For many electric cars, you can add up to 100 miles of range in ~35 minutes with a 50kW rapid charger.
The bigger your car’s battery and the slower the charging point, the longer it takes to charge from empty to full.
There is a little thing that people don’t think about when looking at businesses called “operations”. They simply do some mental accounting and think about costs and revenue. Operations can absolutely crush a business model.
Operations are why Southwest Airlines has dominated the industry. Every jet is alike. That simplifies repairs and reduces inventory costs. It simplifies operations on the plane for loading and unloading, including drinks/snacks and getting rid of stuff. It simplifies diagnosis when things go wrong.
How about a rental car company?
When someone turns a car in, the person checks it. If it needs an oil change, it goes to service and in an hour or two is ready to roll. If it needs any other service, that’s done in half a day. Most big rental car agencies will sell off and buy new cars before major service needs to be done, so they avoid that cost.
Operational efficiency allows rental car companies to have less inventory, and more cars out on the road where they are making money for them.
Contrast that with an EV. Sure, lower maintenance costs. Maintenance is really close to zero. But, what about tires? They have to be changed more often with EVs and they are more expensive. Increased cost.
The real killer though is charging. They need a huge real estate footprint with a lot of chargers and have to purchase electricity to charge them. It’s hard to pass along the costs to consumers since consumers have a choice between gas and electric cars. That’s expensive and it means cars aren’t out on the road making money for them. Instead, they are sitting, and not only sitting, the company is paying for them to sit while they charge.
That’s why Hertz is opting out of the EV business.
Nicely balanced discussion with some great points. The troubling part is that Hertz operations folks could have figured these points out before buying 20K vehicles - so the question becomes “Why did they make the choice in the first place?”
Great article. I haven't rented a car in years, so I never even thought about the issue of "refueling" - which is a pain when you are trying to drop off your car so you can catch your flight. Add another x number of hours to refuel, and there goes your travel sechedule.
Really, didn't *anyone* at Hertz think this through?