Hertz (HTZZ) expands its presence in the EV market

Hertz Global Holdings, Inc. (HTZZ) has announced two major deals that will increase its investment in the electric vehicle (EV) market. The car rental company has partnered with Tesla, Inc. (TSLA) and Uber Technologies, Inc. (UBER) to extend its range with EVs.

Hertz has committed to an initial order of 100,000 Tesla vehicles by the end of 2022. EVs will eventually make up about 20% of the company’s global fleet. Hertz will also work to improve the charging station infrastructure in its network.

Tesla shares have risen more than 12% since the announcement of the deal with Hertz, pushing the company’s valuation to more than $1 trillion. Tesla is plagued by many production delays and challenges to meet demand. Supply chain issues and difficulties in acquiring semiconductor chips could jeopardize plans to meet the new manufacturing requirements associated with the Hertz deal.

Nearly 40% of US consumers are likely to consider buying an electric car for their next car. Confidence in EVs has increased as sales have increased by about 200% in the past year. Automakers are also jumping on board, with three brands announcing that they will increase EV sales by 40% to 50% by 2030.

With more electric vehicles on the road, there is a need for more charging stations across the country. The partnership with Tesla gives Hertz customers access to 3,000 Tesla charging stations. Hertz will also include digital guidance to educate customers about the electric vehicle and ultimately make it easier to rent EVs through the mobile app.

Electric Uber-Hertz Rental

In partnership with Uber, Hertz will make up to 50,000 Tesla vehicles available for rental by 2023. Beginning November 1, drivers in Los Angeles, San Francisco, San Diego and Washington DC will be able to rent Tesla cars from Hertz through this program. Customers receive a weekly preferential rate on this Hertz rental, which includes insurance, maintenance, and unlimited miles.

These announcements come as the appetite to incentivize consumers to buy electric vehicles has grown across the country, including at the federal level. There are several laws that may encourage people to buy an electric car instead of a combustion engine car, leading to a potential tax credit of $12,500.

However, some incentives for electric vehicles could incentivize some automakers over others. The legislation has been criticized by Tesla founder Elon Musk because an additional credit to automakers does not apply to its non-union facilities. While Musk may not be happy with that part of the bill, other credits included in the legislation could boost sales of Tesla’s lower-priced Model 3.