By Jim Ringold
My knowledge of the rental car business is slight. I have observed the car rental business streamline while it tries to be both profitable and competitive. But a new page has been turned, maybe a whole new book. Please allow me to position my thinking on renting a car.
When I was corporate renting, convenience and what I considered to be a desirable ride were top requirements. When I rent for myself, the prime consideration is cost, followed by the vehicle. Convenience slips down a notch, time is no longer as important.
One feature that always appealed to me was getting off the bus to a whole row of cars and getting to pick one. As a frequent renter, an upgrade was always a nice perk.
A pain with car rental is the choice of two meh options: 1) cheaper, but bring it back full of gas, or 2) bring it back empty and pay a large premium for gas for the convenience of the rent car company filling it up. The filling stations near the airport know about this and generally have higher prices. The locals know this and avoid these stations. The trick is to buy further from the airport and top off into the filler neck, so that the gauge still shows full when the rental car return person checks the gas gauge. Oh, those were the days!
Now, Hertz has made a huge commitment to Tesla Model 3s, somewhere between 100,000 and 200,000 of them, at the same price that you would have paid at the time of the agreement. Remember Elon’s promise that his mother and brother pay the same price you do! The company also doesn’t give fleet discounts.
To be clear, cars sold to Hertz have no discount. Same price as to consumers.
— Elon Musk (@elonmusk) October 26, 2021
On the Tesla side, I can opine with a little more authority, having driven Teslas since 2016 and currently driving a Model 3. I’ll cover the obvious advantages to Hertz first:
- The Teslas currently do not depreciate as fast as most other cars.
- The Teslas will be more reliable and require less service.
- The Teslas can be used by Hertz for a longer period of time and still be easy to sell for a good price.
- The Teslas will be in demand out of people’s curiosity. People used to rent cars to see if they wanted to own one (and probably still do). Hertz will have Teslas, and other mainstream rental car companies will not.
Can I safely assume a Tesla will cost more to rent than other cars while costing Hertz less to operate? And other rental car companies will have to charge for their gas, while Hertz destination chargers will use cheaper electricity. No need to store electricity, unless there are lower electric utility rates at night. Then Hertz many want to consider battery packs to store energy.
On the Tesla side of this, it is a win as well. As you are likely aware, Tesla does not spend money on conventional advertising. But Hertz is, and it is using an extremely well known Tesla Model S driver — “Hertz, Let’s Go!” quarterback for the Bucs, Tom Brady. “Plugged In” & “Speed” are the names of the commercials Hertz is current running. And if you don’t follow football, “Let’s Go” is Tom’s game-day rallying cry. Is this great product marketing and ad integration or what!
Back to the Model 3: Assuming all the Hertz Teslas are white, and likely with black, easier to maintain upholstery and interior trim, large identical production runs will be possible for Tesla. If it was me, I would put yellow wheels on the Hertz Teslas!
Giga Texas is the highly likely production location. Besides having the capacity, the centralized shipping point is logistically an advantage cost wise.
My mind congers up all sorts of things that could be done with the Model 3 Hertz. When you bring a rental car back, it goes into a return line and an employee comes up with a handheld electronic device and enters mileage, gas level, and inspects the car. With a Tesla, the renter gets out, surrenders the “card key,” and the Model 3 sends all the information for billing. No odometer misreading.
The return cars are all in the cleaning lines. Each car has to be started and moved forward as the line progresses. Could Teslas be programmed to move themselves up in line within a geofenced area? If there is any exterior damage, the cause will be recorded on the 3’s video memory, reducing the “he says, she says” cause of the damage.
The renter’s destination will be uploaded, if desired, when the rental transaction takes place, so the map will be ready to go when driving off. Certainly getting back to the rental location would be the “home” destination.
Could the Hertz credit card be a Tesla key, yellow of course, so all that would be required is to enter that card key number into the car remotely, and when you get to the car it says, “Let’s go!” This eliminates the big problem of renters taking the key with them as they leave the rental car, because they constantly do that! With the Hertz credit card/keycard, no problem.
Of course, a little ways in the future, the Hertz Tesla will be able to come pick you up. And when you are through with it, it drives itself back to Hertz! That may be sooner than you think if it is all on airport property! Presto, no more bus ride to the cars.
What I would really like to know is who initiated this wonderful win–win venture? Hertz or Tesla? If you know, will you please let Zach know?