It wasn’t that long ago that sales to rental fleets were seen as a sign of failure. With the dawn of the electric-vehicle age, that’s changing.
In the past, automakers typically took aging or unpopular models, stripped them of many creature comforts and sold them to the likes of Hertz and Avis at discounted prices. It was a way to keep production lines moving until a freshened version of the car got to market.
EVs are hot sellers right now, so cutting big deals with Hertz and other fleet buyers isn’t the desperate move that it once was, but it sure is an insurance policy.
Both Tesla Inc. and General Motors are both cranking up production of EVs over the next several years. If middle market consumers don’t make the switch, both companies and Polestar — the all-electric automaker controlled by Volvo and its Chinese owner Zhejiang Geely Holding Group — will have already secured fleet deals to boost sales and keep building economies of scale.
That insurance plan might be needed. Right now, electric vehicles are 5 percent of U.S. sales. That’s about double what it was last year, but no one in the industry is sure how quickly sales will keep growing. The buyers today are the early adopters, many of whom are passionate about climate change or technology, or just having the newest and coolest car on the block.