50% of Hertz's 100,000 Tesla Model 3 Order Could Be Rented to Uber Drivers
Massive 100,000 Tesla Model 3 order by car rental giant Hertz could see up to 50% of vehicles dedicated to Uber rentals
AutoMarketplace NYC Newsletter is written by Dawood Mian, Founder of AutoMarketplace (launching soon). He covers the NYC for-hire transportation industry and related news.
Check out AutoMarketplace on YouTube ▶️
One day after announcing a 100,000 Tesla Model 3 order estimated to be worth over $4 billion, car rental giant Hertz revealed a partnership with Uber that could see up to 50% of the entire order, or 50,000 Model 3s, dedicated to rideshare rentals by 2023. Hertz’s Tesla rental program for Uber drivers will launch on November 1st in Los Angeles, San Francisco, San Diego, and Washington, D.C. Rental rates are reported to be $334 per week, including maintenance and insurance. Note that outside of NYC, most rideshare drivers (ex-UberBlack luxury service drivers) do not pay commercial insurance out-of-pocket, so $334 per week is viewed as expensive. Uber also says the goal is to reduce the rental rate to ~$300 per week as the program rolls out nationwide over the coming months. The Model 3 will qualify for premium (i.e. higher paying) Uber rideshare products, Uber Comfort and Uber Green, which the company says should help pay for the higher rental rate.
Drivers will have access to Tesla’s supercharging network as well as discounts on certain EVgo charging stations. It’s also noteworthy that drivers will not be able to turn on Tesla’s autopilot and must have at least a 4.7 rating plus 150 completed trips. In an interview with CNN, Uber CEO Dara Khosrowshahi & Hertz CEO (also ex-CEO of Ford) Mark Fields talked about the strategic rationale for the deal.
Key takeaways of the Uber partnership with Hertz on Tesla Model 3 rentals:
Uber has sustainability / emission goals it would like to achieve over the next several years and realizes many drivers can’t afford to experiment or are nervous trying out electric vehicles (EVs), given the lack of charging infrastructure and many EV models priced in the premium segment, such as the $42,000 Base MSRP Tesla Model 3
“While this partnership is a step forward to advance electrification on the Uber platform, it’s important to note that owning an electric vehicle is still too often more expensive than a traditional gas-powered vehicle. This is a critical challenge that we all must continue tackling together with government leaders through smart policy to bring the cost of EV ownership in line with or below gas-powered cars.” - Uber press release
By working with Hertz to provide a relatively affordable Tesla Model 3, Uber’s CEO believes it can convince drivers to make the switch to EVs as they understand the dynamics around range and charging. An interesting stat that the Uber CEO gave in the CNN interview indicated that only about 10% of drivers on Uber’s platform rented their vehicle! (I’ve never heard that stat revealed publicly before)
Hertz’s CEO approached the deal as an opportunity to expand into EV rentals and the Uber program as a great way to drive utilization initially (Note: Hertz has had a Uber rental partnership since 2016)
Hertz’s CEO also indicated the deal could help the company transition from a traditional car rental company to an EV / autonomous vehicle (AV) fleet management & mobility services company.
“We are going to become experts on managing large electrified fleets, well before our competition. I think that’s going to pay a lot of benefits for [Hertz] today and, as you think towards autonomy down the road, [it will help us] solidify our position or create a bit of a moat on being that central component of the mobility ecosystem…” - Hertz CEO (ex-Ford CEO) Mark Fields
AutoMarketplace Take
Firstly, NYC TLC drivers will not likely see a rollout of this program as Hertz is not involved in TLC rentals, which is a more regulated for-hire transport market (vs. others) requiring unique licenses and commercial insurance (i.e., more akin to managing a taxi fleet than a car rental fleet). That being said, the news is noteworthy because it is yet another EV-related announcement that indicates the national rideshare industry continues to head towards electrification (according to Bloomberg, only 0.5% of all rideshare cars nationally are EVs).
In NYC, there have been several notable TLC industry-related EV developments from the launch of Revel’s Tesla ridesharing service & Brooklyn charging hub to the yellow cab EV Taxi Pilot Program. Based on the latest NYC Open Data stats, 0.7% of all TLC cars (ex-Yellow Cabs) (interestingly ahead of the rideshare national average) are EVs with Tesla owning a dominant 77% market share!
The transition to EVs in NYC is likely to prove trickier than other regions given many drivers, TLC and non-TLC, do not park or have access to garages that can charge their cars overnight or during their time off. In addition, the lack of local Level 3 fast-charging locations will also cause many drivers to delay switching over to an EV. This is why company’s like Ample believe battery swapping might be the best solution to drive EV adoption in cities like NYC (the Company recently announced a partnership up with TLC fleet company Drive Sally). All that being said, as NYC charging infrastructure is built out and EVs get cheaper to purchase (whether new or on the used market), adoption is set to increase.
With gas prices at multi-year highs, I’m sure many Americans and New Yorkers are seriously contemplating switching over to an EV. My best guess is NYC drivers, both TLC and non-TLC, will closely track how the EV industry develops from brand options, prices, range, reliability and the availability of charging locations. In the meantime (i.e., next 3 to 5 years) TLC drivers may choose hybrid vehicles over EVs.
Are you a NYC TLC driver who’s switched or thinking about switching over to an EV? How has your experience been? Let us know in the comments section below!
AutoMarketplace NYC Newsletter is written by Dawood Mian, Founder of AutoMarketplace (launching soon). He covers the NYC for-hire transportation industry and related news.
Check out AutoMarketplace on YouTube ▶️