Too expensive, too complex, too high risk: Car rental companies put the brakes on electric cars

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The number of registrations for electric cars is increasing rapidly. Deliveries in China, the world’s largest auto market, rose almost 40 percent in November from a year earlier to 841,000 electric and plug-in vehicles, according to industry association PCA. The rate of newly registered electric cars in the EU exceeded 20 percent for the first time in August 2023; More than 165,000 electric vehicles were delivered, out of approximately 788,000 new cars. The proportion of electric vehicles in Switzerland is now almost 30 percent; 20 percent of these are pure electric vehicles, the rest are plug-in hybrids. Of the 79.4 million new cars produced in 2022, 7.2 million were electric cars; This rate corresponds to a share of almost ten percent.

But all that glitters electrically is not gold: According to a recent report in German trade magazine Automobilwoche, the car rental industry is increasingly skeptical of electric vehicles. Electric vehicles are still too expensive, use (keyword: charging) is too complicated, and the risk to homeowners is too high, insiders say. Renters have also mostly rejected electric cars: “There is no particular demand for electric cars from our rental customers – quite the opposite,” says Jens Erik Hilgerloh, President of the German Car Rental Association (BAV) and chairman of the Starcar Group. One of Germany’s leading car rental companies.

Tesla as a party crasher

According to Hilgerloh, medium-sized property owners organized in the association have always been quite cautious about electric cars. However, according to Automobilwoche, criticism is now increasing among international car rental companies. US electric pioneer Tesla and his eccentric boss Elon Musk, 52, have a big part in this misery: two years ago, industrial giant Hertz signed a mega deal with Tesla for 100,000 electric vehicles, marking an international breakthrough in electronic technology. was seen as a signal. mobility was celebrated.

But homeowners no longer want to celebrate today: repeated sudden price cuts for Models 3 and Y have a direct impact on the residual value of electric vehicles. These are also a determining factor in the rental company’s calculations: If the prices of new vehicles fall, the residual value of used vehicles also decreases. The risk that the landlord will ultimately have to pay extra increases significantly. “Manufacturers want to sell us electric cars, so we have to take on the residual value risk,” explains Jens Erik Hilgerloh. The problem: Demand for used electric cars is now almost non-existent and is falling again as new Teslas become available at cheaper prices. It’s a serious problem, especially for small homeowners.

The costs of electric vehicles are too high

The first car rental companies are now pulling the plug: At the end of November, Munich rental giant Sixt announced that it would not offer Teslas in its fleet in the future. “The Teslas currently in our fleet will be sold after they expire, thus gradually reducing their numbers,” said a Sixt company spokesperson. Tesla models will also be removed from the product range in Switzerland, Sixt confirmed upon request.

But it’s not just high acquisition costs and low residual values ​​at the end of service that Sixt cites as the reason for moving away from Tesla, but also high repair costs. Because they have much fewer wearing parts, electric cars are thought to be less prone to failure than combustion engines and are also cheaper to maintain. But as a recent study by the Association of German Insurers (GDV) shows, repair costs for an electric car are approximately 30 to 35 percent higher than for a comparable internal combustion engine.

Problems with charging stations

At Tesla, these costs are likely to be significantly higher. The reason: Three years ago, the electric car maker radically changed the design of two of its best-selling products. Since then, the rear of the Model 3 consists of two complex castings instead of the previous 70 separate parts. Even the rear of the Model Y is a single casting. This saves assembly time, molds and tools, as well as fittings. But the disadvantages of the design are obvious: in the event of an accident, the entire rear part needs to be replaced, rather than just individual sheet metal parts – costs increase many times.

Another problem why car rental companies remain skeptical about e-mobility, according to Starcar boss Hilgerloh, is the development of adequate infrastructure: “If every second in a rental station with 200 vehicles is an electric car, then I need at least ten charging stations,” he said. Hilgerloh had calculated this before. Every public electricity supplier will reject this.

Electric cars continue to arrive

Has e-mobility among car rental companies disappeared in the medium term due to major challenges? As Sixt said, absolutely not. By 2030, 70 to 90 percent of fleets will consist of electric vehicles, according to a company spokesperson. Sixt recently signed a contract with Chinese automobile giant BYD for 100,000 electric vehicles. Currently, one in five cars in the Sixt fleet is electric as a hybrid or plug-in hybrid, i.e. battery electric.

Electric cars currently make up about 11 percent of Hertz’s fleet, 80 percent of which are Teslas. The world’s largest car rental company initially aimed to increase the proportion of electric vehicles in its fleet to a quarter by the end of 2024. “But this is not a sure thing,” CEO Stephen Scherr (57) said recently. They now want to buy cheaper electric vehicles from other manufacturers such as GM, where Hertz also expects lower repair costs. Banning Tesla from the fleet, as rival Sixt aims to do, is not a problem for Hertz: Tesla will also benefit from lower purchase prices. According to Automobilwoche, even Sixt could dream of offering Tesla again in the future if the vehicles’ costs fall back into line with the company’s pricing structure.

Source: Blick