The COVID-19 (coronavirus) pandemic and economic downturn spared no industry, yet some industries experienced harsher conditions than others. Consider the US Car Rental Industry: As travel restrictions hampered demand from main end markets, the industry’s 2020 declines quadrupled that of its declines during the 2009 recession.
New sheriff in town
Hertz Global Holdings Inc (Hertz) is a prime example of industry woes, as the pandemic rendered its massive fleet useless. Further complicating matters, Hertz's CEO resigned, and a filing for bankruptcy soon followed. In September 2021, following one of the worst stretches in company history, Hertz announced a new interim CEO, Mark Fields, former CEO of Ford Motors. His arrival ushered in a new era for the company, as he announced that Hertz would order 100,000 Tesla vehicles to build an electric rental fleet by the end of 2022.
This announcement sent a shockwave across the market, as Tesla became the sixth public company in the world to have a $1.0 trillion market cap.
Rivals strike back
With the news of Hertz’s announcement, rival industry operator Avis Budget Group (Avis) countered with a promise for more activity in the electronic space. The mere mention of electric vehicles (EVs) skyrocketed AVIS stock 108.0% to $357.17.
Enterprise Rent-A-Car Company (Enterprise), the largest industry operator, is expected to follow Hertz and Avis. Assistant Vice President Chris Haffenreffer compares the current state of EVs in the United States to that of Europe. The European government has policies and regulations to promote the transition to EVs, and Haffenreffer believes the US government will implement similar regulations domestically.
Going green
The question is, why? Why are electric vehicles (EVs) such a hot topic? They are better for the environment.
- Zero Tailpipe Emissions
- No fuel lines or tanks, reducing air pollution.
- Less wheel-to-wheel emission
- Extracting, refining and transporting petroleum generates a tremendous amount of air pollution.
- EVs generate emissions only during the battery production stage in powerplants.
- Emissions from EVs over their lifetime are still lower than those of gasoline-powered vehicles.
Try before you buy
In August 2021, President Biden set a target that by 2030, EVs will account for 50.0% of new US car sales. That number is only 2.0% today.
Industry operators believe the car rental industry will be the key to stimulating consumer demand to reach this target. While the price of EVs may turn off customers, experiencing them firsthand through rental services might cause them to change their stance. President Biden’s Bipartisan Infrastructure Plan to invest $7.5 billion to build a nationwide network of EV charging stations will further support demand.
