Model 3
Nicolas Caballero's picture

Potential Gamechanger For Driving Platforms: Hertz to Provide Uber With Up To 50K Tesla Model 3 by 2023

Hertz just announced today that it will be providing 50 thousand Tesla Model 3 units to Uber, in yet another surprising (somewhat) move that is shaking the ground for many driving platforms. It was a matter of time, as just by doing simple math the whole transaction absolutely makes sense from a TCOE point of view. And it is also a matter of time to see other similar companies following the same pathway.
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As per the announcement, Uber stated that it will offer Teslas to its ride-sharing drivers to rent for a flat monthly fee that will include insurance and maintenance costs. The company will source the Teslas, which Reuters reported will be "mostly" Model 3 cars, from rental giant Hertz. Hertz itself just inked a deal to buy 100,000 Teslas to add to its rental fleet by the end of next year.

According to Reuters, "...Uber drivers can rent a Tesla through Hertz starting on Nov. 1 in Los Angeles, San Francisco, San Diego and Washington DC, with the program later this year expanding to cities nationwide, the ride-hail company said in a blog post."

Uber logo

They also added that "...Tesla rentals, consisting mostly of the electric vehicle company's Model 3 sedan, will be available exclusively to Uber drivers and start out at $334 a week, including insurance and maintenance. Uber said the rental cost would drop to $299 per week or lower as the program expands in the coming year."

Hertz left bankruptcy a year after the pandemic devastated the car rental business. An early victim of the pandemic, Hertz officially emerged from bankruptcy in July. Its return coincides with and was made possible in part by a red-hot market for rental cars. The company announced today that it will buy 100,000 electric vehicles from Tesla, one of the largest purchases of battery-powered cars in history and the latest evidence of the nation’s increasing commitment to EV technology.

Hertz logo

Uber had previously announced that it would start a transition to becoming an EV-only service by 2030 in the U.S., Canada, and Europe. It had also stated that it would start a Zero Emissions Incentive program that would reward drivers who use EVs by paying them $1 more per trip, up to a maximum of $4000 a year. As a side note, the Teslas will also qualify to be called Uber Green or Uber Comfort rides, which charge riders a premium.

It is certainly a Gamechanger for Uber, as the the company had vowed many times before to operate only electric vehicles by 2030, as mentioned above, and worldwide by 2040. It is still too early to predict what the other companies will do, but it clearly gives Uber (and Hertz, by the way) a huge advantage in terms of costs, logistics and returns.

Model 3

As for Tesla, Elon Musk envisions a future of self-driving cars, where the majority of people travel by autonomous Tesla vehicles. It’s also a future where car owners seamlessly rent out their vehicles to serve as self-driving cabs while they’re not using them. Part of the company’s mission is to ramp up the global transition to sustainable energy. This is yet another disruption in the driving platforms industry, as the TCOE of a Model 3 is by far better than any ICE car, as Uber (and Hertz, before) obviously understood very well.

Nico Caballero is the VP of Finance of Cogency Power, specializing in solar energy. He also holds a Diploma in Electric Cars from Delft University of Technology in the Netherlands, and enjoys doing research about Tesla and EV batteries. He can be reached at @NicoTorqueNews on Twitter. Nico covers Tesla and electric vehicle latest happenings at Torque News.


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