The American football player advertises electric cars in a new Hertz commercial.
(Photo: Hertz)
new York The 100,000 Teslas ordered by Hertz have not yet been confirmed by Elon Musk. But they show: The troubled US car rental company has worked its way out of the corona crisis, although a year ago it didn’t look like Hertz could get back on track.
At the end of May 2020, the ailing car rental company officially applied for Chapter 11 bankruptcy protection. Chapter 11 of US bankruptcy law allows companies to continue doing business. A bankruptcy court grants them protection from creditors for a period of time in order to reorganize.
In the middle of the pandemic, when the entire country came to a standstill and hardly anyone traveled by plane, the airport business, which was so important for Hertz, also collapsed. In contrast to the airlines, however, the car rental companies did not receive any government aid worth billions. The situation seemed hopeless.
It is therefore all the more surprising that Hertz made headlines over a year later as Tesla’s largest customer. As the chairman of the board and former Ford CEO Mark Fields announced last week, Hertz plans to buy a total of 100,000 Tesla Model 3s by the end of 2022. The company plans to sublet half of this to Uber drivers as part of a partnership.
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Tesla founder and CEO Elon Musk made it clear this week that the sales contract has not yet been signed and that Hertz will also have to pay the full price. But one thing is certain: Hertz is positioning itself as an e-car player among rental companies. On the Internet, the rental company in the USA is already placing yellow-highlighted advertisements with the slogan “Rent EV” (Electric Vehicles). The commercials with football superstar Tom Brady are also running: In it, the athlete and environmental activist drives off from the airport in a Hertz Tesla and loads a software update himself with a yellow cable.
Nicholas Colas, co-founder of the investment consultancy Datatrek Research, calls the Hertz-Tesla deal a “huge win-win” for both sides. Tesla has secured the sale of ten percent of its future production, he writes. And other business areas are opening up for Hertz: “We can imagine that Hertz will also monetize charging as a service,” Colas writes.
Hertz CEO Mark Fields believes in the future of electric cars
The car rental companies have all missed the trend towards ride sharing. But they could secure their comeback if they work with electric car manufacturers who are also developing autonomous vehicles. “We think that’s Hertz’s real goal. They know that as a major buyer of e-cars, they will have an advantage if they ultimately make the transition to autonomous driving, ”says Colas.
After Hertz applied for Chapter 11 last year to reorganize its business, new investors came on board in May. Investors from Knighthead Capital Management and Certares Management have pumped nearly six billion dollars into the car rental company in return for shares. Money with which Hertz can now buy the Teslas, among other things.
CEO Fields leaves no doubt that he sees the future in e-cars: “The last survey I saw shows that 70 percent of consumers consider an e-car the next time they buy a car,” he argued at the announcement of the Tesla deal. Anyone who would buy an e-car would probably also rent one. The demand is there.
But Fields is also looking for other ways to position itself in the future. Last week, for example, he entered into a partnership with the car portal Carvana to sell used Hertz rental cars.
This is a break with the previous strategy of car rental companies like Hertz, Avis or Enterprise, who usually sell their cars in large auctions from providers like Manheim after one or two years. There the vehicles go to car dealers and not to end customers. With Carvana, Hertz can now also reach private buyers directly.
More: Major order from Hertz: Why Tesla is now worth a trillion dollars