In a conscious move toward sustainable mobility, General Motors GM and Hertz Global HTZ recently formed an agreement, per which the former will sell nearly 175,000 of its EVs to the latter.
The automaker will start supplying Chevrolet, Buick, GMC, Cadillac and even its commercial delivery unit, BrightDrop EVs, to the global vehicle rental giant from the first quarter of next year and over the next five years.
These vehicles are expected to be followed by newer EV models built on GM’s Ultium battery technology, such as the Chevrolet Blazer, Chevrolet Equinox and vehicles from its other brands.
Over the five years through 2027, Hertz has projected that its customers could travel more than 8 billion miles in the EVs, cutting down nearly 3.5 million metric tons of carbon dioxide emissions compared to similar gasoline-powered vehicles that travel long distances.
The extensive upcoming EV lineup by GM that includes everything from SUVs to pickup trucks and luxury vehicles will be made available to Hertz for rent. BrightDrop will make its Zevo 600 van available.
Both GM and Hertz are of the view that the plan is the largest expansion drive of EVs among fleet customers because it includes a wide range of vehicle categories across varied price points, thereby making it more popular. General Motors, through the move, ensures that the EV market footprint widens and more customers can partake in the benefits of cleaner transport.
Hertz is focusing on electrifying its vehicle fleet after spinning back from bankruptcy less than a year ago. The coronavirus pandemic badly hurt the company, but once travel eased up, pent-up demand resulted in higher profits for rental car fleets, despite the supply-chain issues denting inventory levels.
To be quickly back in the grind, last year, it purchased 100,000 Model 3 vehicles from Tesla TSLA and hogged the limelight for this bold step. The immense scale of the deal rolled eyes at the time since such a move by a rental company was unheard of. In May this year, it added Model Y vehicles to its fleet.
Apart from Tesla and General Motors, Hertz previously struck a similar agreement with Polestar, a Volvo-backed EV startup, for the supply of 65,000 vehicles. Of the three partnerships so far, the one with GM is the biggest. Hertz has set itself a goal to create the largest rental fleet of EVs in North America, with an enormous number of EVs available for rent at 500 Hertz locations spanning 38 states. Currently, it aims for one-quarter of its fleet to be electric by the end of 2024.
General Motors has been long in the EV domain, although it has not been able to match the levels of the EV giant Tesla as it had initially thought. To rev up its electrification drive, it has laid out an ambitious two-year milestone to scale up capacity between 2023 and 2025. It intends to reach a production volume of 1 million EVs in North America and China each by 2025. To ensure that it remains on the trajectory, General Motors is intensively expanding its electrification drive with the planned ramp-up of EV production and EV battery charging networks.
In a major development, recently the company announced that it is set to invest $491 million at its Marion Stamping plant to prepare the facility for manufacturing steel and aluminum stamped parts for future vehicles, including electric cars made at various GM assembly plants. The capital outlay will be used to buy and install two new press lines and complete press and die upgrades and renovations. It will also construct a 6,000-square-foot addition. The investment will strengthen GM’s North America division and ensure mass EV production.
GM deliveries to Hertz are expected to be carried out smoothly, driven by the opening of GM Ultium Cells battery cell plants in Ohio, Tennessee and Michigan. Also, some while ago, the company inked a deal with Lear Corporation LEA to bolster the Ultium EV platform. Lear will supply electrification technologies for GM’s celebrated platform. With Ultium Drive playing a pivotal role in GM’s EV ambitions, the latest agreement with Lear for the supply of e-mobility technologies for its hardware platform bodes well.
General Motors has a Zacks Rank #3 (Hold) currently. Its shares have lost 27.4% in the past year against its industry’s 1.8% rise.
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