Rental car company Hertz Global Holdings (HTZ.O) plans to order up to 175,000 General Motors Co (GM.N) electric vehicles over the next five years, its latest move toward zero-emission models.
The multi-billion dollar, multi-year deal could be the first of many GM agreements to supply electric vehicles to rental car companies, said Steve Carlisle, the automaker’s North American operations chief, on a conference call.
“It’s an enormous first step,” Carlisle said, adding that GM is in talks about similar deals with other rental car companies.
GM shares fell more than 5% Tuesday afternoon following rival Ford Motor Co’s warning late Monday that supply chain costs were $1 billion higher than expected in the third quarter. Ford shares were down more than 11%.
Automakers have cut reliance on low-profit, bulk sales to rental car agencies as supply chain problems curtailed production. Carlisle said GM expects to deliver electric vehicles to Hertz at close to retail profit margins.
GM Chief Executive Mary Barra said in a statement “each rental experience will further increase purchase consideration for our products and drive growth for our company.”
GM aims to have capacity to build 1 million EVs annually in North America by 2025. Carlisle said the sales to Hertz fits within that previously announced goal.
Such deals would ease pressure on GM to hit EV sales targets through individual customer sales, a market dominated by Tesla Inc (TSLA.O).
Hertz’s current goal is for one-quarter of its fleet to be electric by the end of 2024. In April, Hertz said it would buy up to 65,000 electric vehicles over five years from EV maker Polestar, a joint venture between China’s Geely and its Swedish Volvo unit. In October 2021, Hertz announced plans to purchase 100,000 Tesla electric cars, primarily the Model 3.
The GM deal “spans a wide range of vehicle categories and price points — from compact and midsize SUVs to pickups, luxury vehicles,” the companies said.
The first GM electric vehicles to ship to Hertz will be Chevrolet Bolt models starting early next year, Carlisle said.
GM expects Hertz to deploy many of its EVs in Los Angeles and San Francisco, helping to meet California electric vehicle quotas. Hertz Senior Vice President Jeff Nieman said the company plans to offer EVs across its network, with priority to Los Angeles, San Francisco, Miami and Orlando.
Hertz estimated customers could travel more than 8 billion miles in these EVs and save about 1.8 million tonnes of carbon dioxide-equivalent emissions versus gasoline-powered vehicles.