American Lease, one of the largest NYC TLC rental companies, reaches deal to acquire thousands of all-electric SUVs from bankrupt Fisker, along with company software "source code". What's going on?
American Lease is definitely one step ahead with this deal, it's definitely going to take them a little while to put them all in the streets, EVs are still not the preferred vehicle (subject to change as the 50% benchmark on the Green Rides Initiative approaches), supercharging infrastructure it's still pretty poor in NYC especially during rush hours and word out there is that the saving comparing a gas vehicle go from bare minimum to none. Putting all that aside definitely a great deal, purchase price was a steal which will allow them to offer good prices, be able to maintain them and make a profit, these have been the challenges rental companies have faced with EVs, look at Hertz with their Teslas and on the TLC side Sally with a bunch of Kia Niros sitting on their garage.
It's definitely an interesting transaction and to your point the purchase price is what's making it interesting. Think where Hertz, etc failed it when you buy these cars too expensive, don't understand underlying consumer demand things can blow up financially because of unexpected depreciation, repairs and underutilization. Having run a smaller leasing company, we can tell you, the initial cost of purchasing a car is a huge driver of returns and scale. Two leasing companies could be in the exact business, but if one buys vehicles badly and doesn't have sufficient scale, it won't survive vs. the other. Your point on NYC charging infrastructure is also critical as well re. underlying TLC driver demand for EVs.
American Lease is definitely one step ahead with this deal, it's definitely going to take them a little while to put them all in the streets, EVs are still not the preferred vehicle (subject to change as the 50% benchmark on the Green Rides Initiative approaches), supercharging infrastructure it's still pretty poor in NYC especially during rush hours and word out there is that the saving comparing a gas vehicle go from bare minimum to none. Putting all that aside definitely a great deal, purchase price was a steal which will allow them to offer good prices, be able to maintain them and make a profit, these have been the challenges rental companies have faced with EVs, look at Hertz with their Teslas and on the TLC side Sally with a bunch of Kia Niros sitting on their garage.
It's definitely an interesting transaction and to your point the purchase price is what's making it interesting. Think where Hertz, etc failed it when you buy these cars too expensive, don't understand underlying consumer demand things can blow up financially because of unexpected depreciation, repairs and underutilization. Having run a smaller leasing company, we can tell you, the initial cost of purchasing a car is a huge driver of returns and scale. Two leasing companies could be in the exact business, but if one buys vehicles badly and doesn't have sufficient scale, it won't survive vs. the other. Your point on NYC charging infrastructure is also critical as well re. underlying TLC driver demand for EVs.