Remember when Hertz ordered 100,000 cars from Tesla for $4.2 billion? Turns out we now know where most of the vehicles will end up as the car leasing company is working with Uber to equip its gig drivers with electric cars. According to the agreement between the two companies, Uber will facilitate its drivers renting 50,000 of the Model 3’s from Hertz.
Uber has zero-emission ambitions of its own, and it includes going electric 100 percent by 2030 in the US, Canada, and Europe while it would do so globally ten years after. Last year, it had announced that it had reserved $800 million to assist its drivers in the US, Canada, and Europe to switch to electric cars by 2025.
However, the ride-hailing company has another source of motivation as California, the largest vehicle market in the US has mandated Uber and its peers to transform 90 percent of their fleet to battery-powered cars.
This arrangement with Hertz is not new for Uber as it has been offering discounts to some of its drivers renting cars from Hertz.
From November, when Hertz announced it would start accepting delivery from Teslas, Uber drivers operating in Los Angeles, San Diego, San Francisco, and Washington DC can lease a Model 3 from Hertz. The rental would cost $334 initially and cover both maintenance and insurance. However, the price will eventually drop to $299 or even lower.
More drivers all over the country will be able to join the program down the line. Uber wants to have all the 50,000 EVs registered by 2023.
While the weekly rental might look expensive and discouraging for drivers, Uber thinks it can convince them with the savings in fuel and maintenance that electric vehicles are known for. The ride-hailing company is even throwing in 50 cents per ride in a hybrid electric car, with another dollar going to drivers using purely electric vehicles. This bonus is courtesy of Uber’s Green Future Program.
In comparison, Hertz’s car rental costs between $150 and $325, showing the considerable markup on the Tesla vehicles.
Uber will use its rating system and driving history to determine which driver will get a Model 3. They must have at least 4.7 stars and completed not less than 150 trips on the platform. Drivers who qualify can charge at Tesla’s Superchargers and even enjoy discounts at some EVgo charging stations.
Hertz is planning to build its own stations, too, probably giving the drivers more charging opportunities.
Uber drivers, however, could be understandably apprehensive about this deal with Hertz, given how other assisted lending programs ended. A previous attempt by Uber was halted when drivers complained they were accumulating more debt than they could pay.
However, with this scheme, Uber has clarified it is not trying to lure drivers from owning their cars to renting.
Uber would have another motive for this electric vehicle renting scheme because it had set out as an environmentally friendlier transport option. However, studies have shown the opposite is the case and ride-hailing causes 50 percent more pollution than private car ownership.
While Uber’s deal is enormous and has made the news, this is not the first time a ride-sharing platform has used electric vehicles in its fleet. Revel, better known for its moped rental services, announced it would use 50 Tesla Model Y on its platform in New York City earlier this year.
According to Bloomberg, less than 1 percent of ride-sharing cars in the US. This is not surprising as electric vehicles make up less than 5 percent of total vehicle sales.
“This new program with Hertz aims to create positive environmental benefits by reaching rental drivers, who are often looking to offer rides for more hours and more miles than the average driver,” Andrew Macdonald, Uber’s senior vice president for mobility and business operations, said. “Research shows that when rideshare drivers go electric, they realize three- to four-times greater emissions savings than average car owners.”