Hertz car rental has reinvented its business in a matter of weeks.
Rental car company Hertz is having a big week announcing it would buy 100,000 Tesla Model 3 vehicles for its fleet at a value of around $4.4 billion dollars. This just over a year after it filed for Chapter 11 bankruptcy but only a few weeks after former Ford CEO Mark Fields took over on October 5.
Today the company brought more news to the mill. It will partner with online car retailer Carvana to help sales and it will also partner with Uber to add up to 50,000 Teslas to the ride-sharing network. Hertz stock surprisingly dipped a tad, after doubling in price when Fields joined the team.
UPDATE 10/29: Hertz CEO Fields said that the program goes well the company might double its order to 200,000 Tesla vehicles. Only half of the 100,000 vehicles agreed upon so far will be used as standard car rentals, the others will go for Uber rentals. Hertz still has the option to add 150,000 more to the fleet. We'll see how it goes, and if they exercise that option.
Hertz and Carvana are partnering because the rental car industry is part of the used-car market, with Hertz currently operating 68 sales locations. It will lean on Carvana to sell its cars that are no longer used for rentals. Hertz usually has to sell its used cars - which have included some serious special editions - at a discount to dealers, but Carvana gives the company a quick way to access customers. And of course the car vending machine retailer gets a cut.
"Our new partnership with Carvana will help Hertz provide a tech-enabled and scalable channel through the lifecycle of our fleet," said Mark Fields, Hertz interim CEO. "This is another step toward the new Hertz - combining our brand strength and global fleet expertise with new technology and innovations to chart a dynamic, new course for the future of travel, mobility and the auto industry."
The Uber deal will make 50,000 of those Tesla's available by 2023, Hertz says, for drivers to rent while driving for the company. The program will start next month in Washington DC, San Diego, San Francisco and Los Angeles, "with a nationwide expansion planned in the coming weeks." The plan also includes new EV chargers at Hertz locations.
Drivers will pay $334 a week to rent a Model 3 for Uber duty with no mileage limit, but expenses for recharging and damage. That price will drop to $299 eventually. Hertz already provides $1 more per trip (up to $4,000 annually) for drivers to make the switch to an EV. This makes sense for many reasons, one of which being that Uber did a study asking its users what car they plan to buy next. Almost half said an EV.
All of that makes us believe Hertz is on the right track, and if a couple people rent a Tesla and decide EVs are for them, all the better. Uber is looking for drivers too; maybe this will get some people back into the seat.