Ines Ferré
·Markets Reporter
Wed, October 27, 2021
The Tesla (TSLA)-Hertz deal is a "major win-win" for both sides, says Nicholas Colas, co-founder of DataTrek Research.
The hedge fund veteran says the arrangement is a "fascinating case study in how new and old industries still need each other to maximize the impact of disruptive technologies on the one hand and leverage that same technology to remake a stale business model on the other."
Hertz Global Holdings has placed an order of 100,000 Tesla cars in a step towards electrifying its rental fleet. The vehicles are set for delivery by the end of 2022. Charging stations will also be installed.
Shares of Tesla soared on the news earlier this week, pushing the electric vehicle giant's market cap past $1 trillion for the first time ever.
"Hertz locks up a significant part of Tesla’s production over the next year, and at what should be healthy margins," wrote Colas in a note to investors.
"Tesla now has 10 percent of its total future 12-month production capacity spoken for, something which will help it plan plant utilization and optimize for efficient production," said Colas.
He goes on to point out the car rental company has a large footprint in the U.S., including major airports and large cities. Hertz will be a useful partner as Tesla grows the number of charging locations for its electric vehicles.
"While these will be only for rental customers at first, we can see Hertz monetizing “charging as a service” for Tesla owners," wrote Colas.
He points out the U.S. car rental industry missed the "ride-sharing" disruption, but it can "make a comeback" by getting involved with electric vehicle makers working on autonomous driving.
"This, we suspect, is Hertz’s endgame strategy. They know that by being a major EV buyer they will have an edge as these vehicles eventually transition to autonomous driving," wrote Colas.
Hertz Global Holdings just came out of bankruptcy over the summer. The company entered Chapter 11 in May 2020, during the pandemic as economies shut-down amid global lockdowns.
Uber partners with Hertz to offer 50,000 Tesla rentals to U.S. ride-hail drivers
Wed, October 27, 2021
By Tina Bellon
(Reuters) -Uber Technologies Inc on Wednesday said it is launching a new partnership with rental car company Hertz to offer 50,000 Tesla Inc vehicles as a rental option for its ride-hail drivers by 2023.
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 https://www.uber.com/newsroom/hertztesla.
The announcement comes after Hertz on Monday said it would order 100,000 Tesla vehicles by the end of 2022, meaning that half of the rental company's Tesla fleet would be reserved exclusively for Uber drivers.
News of the biggest-ever Tesla order led to a share price rally and saw the electric vehicle company's market value surpass $1 trillion on Monday.
Tesla shares on Wednesday were up 3%, while Uber shares were down 1.4%. Hertz shares were up 2%.
Hertz on Wednesday also announced a separate partnership with online used-car dealer Carvana Co, whose shares rose 3% in morning trade. Under the agreement, Hertz would reduce its reliance on mass auctions to offload used rental fleet vehicles and instead sell vehicles directly to consumers through Carvana's sales channels.
For Uber drivers, Tesla rentals will start out at $334 a week, including insurance and maintenance, and consist mostly of the company's Model 3 sedan. Uber said the rental cost would drop to $299 per week or lower as the program expands in the coming year.
Wednesday's deal represents Uber's most significant step so far in expanding the use of EVs on its platform. The company has vowed to operate only electric vehicles on its United States, Canadian and European platform by 2030, and worldwide by 2040.
But only a few ride-hail drivers can afford the higher EV sticker prices and in 2019, only 0.15% of all Uber miles in the United States and Canada were driven in electric vehicles, company data showed.
Ride-hail drivers produce more pollution per passenger mile traveled because they spend more than a third of their time driving around empty. Researchers generally assume that electrifying one ride-hail vehicle reduces the same amount of CO2 as converting three regular gas-powered vehicles.
Hertz, which is emerging from bankruptcy, hopes the EV focus will allow the once-dominant brand to stand out against competitors.
Carmakers also consider partnerships with ride-hail companies as a convenient way to expose more consumers to non-fuel-powered vehicles.
Tesla did not respond to a request for comment.
(Reporting by Tina Bellon in Austin, Texas; editing by Richard Pullin and Mark Porter)
Hertz Teams With Uber, Carvana in Big Shift to Electric Cars
Erik Schatzker
Wed, October 27, 2021
(Bloomberg) -- Hertz Global Holdings Inc., fresh off a blockbuster order for 100,000 Teslas, reached an exclusive agreement to supply Uber drivers with electric vehicles and signed up Carvana Co. to dispose of rental cars it no longer wants.
Taken together, the deals represent a trifecta of aggressive and innovative initiatives with the potential to upend the car-rental business and hasten the transition to greener transportation. The order for Model 3s on Monday, the largest-ever for EVs at $4.2 billion, was such a watershed moment that it propelled Tesla Inc.’s valuation past $1 trillion.
Just as surprising: The company behind it all is barely out of bankruptcy. Only 17 months ago, with the Covid-19 pandemic raging, Estero, Florida-based Hertz was so troubled and its future so uncertain that it sought protection from creditors. Now, under the control of hedge fund and private-equity owners, Hertz is leaning on mobile technology and digitization to transform a stodgy industry known for uninspiring cars and poor customer experiences.
“Our approach is very strategic and very deliberate in terms of how we want to disrupt ourselves and, hopefully, disrupt the industry,” Mark Fields, who’s serving as interim chief executive officer at Hertz, said in an interview. “Instead of asking why, we’re asking why not.”
Under the agreement with Uber Technologies Inc., drivers for the ride-hailing giant who previously had to provide and maintain their own EVs will be able to rent one of 50,000 Teslas from Hertz instead. The program, which starts Nov. 1, is an alternative to buying or leasing, and many drivers may find it more appealing.
Had Uber bought and rented out the Teslas itself, some states might classify drivers as employees. The arrangement with Hertz allows Uber to increase the number of rides taken on EVs without having to change its business model.
“Now is the time to drive a green recovery from the pandemic,” Dara Khosrowshahi, chief executive officer of San Francisco-based Uber, said in a statement.
New Strategy
Partnering with Uber and Phoenix-based Carvana addresses two key weaknesses in the rental industry: asset-utilization -- how actively a car is rented out; and resale recovery -- how much of the purchase price is recouped when the car is sold.
Through the new deal with Carvana, one of the two biggest online car marketplaces, Hertz hopes to eliminate the discounting necessary when selling vehicles from its fleet through dealers and wholesalers. Buyers will be able to pick up cars as soon as the following day. Carvana, home of the car vending machine, earns a commission.
“This provides us with a very effective direct-to-consumer sales channel,” Fields said.
By opening part of its EV fleet to ride-hailing, Hertz aims to maximize revenue per vehicle and improve profit margins. For example, cars typically rented out to leisure customers on the weekend could be used for Uber rides Monday to Friday.
Uber Rates
Under the Uber agreement, drivers will pay a starting rate of $334 a week to rent a Tesla Model 3 with unlimited miles, plus expenses for recharging and incidental damage. That’ll gradually drop to $299. Initially, the program is open only to drivers with a 4.7-star rating and a minimum of 150 trips.
Drivers won’t be able to turn on Tesla’s autopilot feature, Fields said.
Uber is offering drivers a zero-emissions incentive of $1 a ride for using EVs and 50 cents for every rider who chooses to go green. As with all rentals, Hertz covers or absorbs the cost of financing, maintenance, insurance and depreciation.
What Bloomberg Intelligence Says:
“Uber’s partnership with Hertz is probably aimed at fending off disruption from a direct rollout of robo-taxis, built on a network of electric and autonomous vehicles. Renting rather than buying vehicles suggests Uber will keep operating an asset-light model, though high variable costs could be a persistent drag on the contribution margin in the near term.”-- Mandeep Singh, BI senior technology industry analystClick here to read the research.
Hertz has been renting to Uber drivers since 2016. The new relationship builds on that program, adding at least 50,000 Teslas to the pool of available vehicles by 2023 and possibly as many as 150,000. The EVs will be available first in Los Angeles, San Francisco, San Diego and Washington, D.C., with a nationwide rollout to follow in coming weeks.
And because the deal is exclusive, none of Hertz’s rivals in the U.S. can rent Teslas to Uber drivers. They can, however, offer other cars. Lyft Inc. has committed to switch entirely to EVs by 2030.
New Investors
By embracing electrification, Hertz is positioning itself as the green alternative to Enterprise Holdings Inc. and Avid Budget Group Inc. That may appeal to the scores of companies looking to burnish their climate credentials, as well as to consumers wanting to reduce their carbon footprint. According to Uber, drivers who go electric cut tailpipe emissions much more than the average car owner.
Knighthead Capital Management, a distressed debt hedge fund, and Certares Management, a buyout firm specializing in travel, won the bankruptcy auction for Hertz with a $6 billion bid. The initiatives they’ve announced come ahead of a relisting of Hertz shares on the Nasdaq Stock Market.
Early indications are the strategy is paying off. Hertz’s market valuation, based on over-the-counter trading, jumped about $1.2 billion Monday after it announced its deal with Tesla, and stood at $12.9 billion as of Tuesday’s close.
Hertz shares gained as much as 4% in trading Wednesday morning in New York. Uber shares rose as much as 1.2% , while Carvana advanced as much as 5%. Tesla gained as much as 3%.
Fields acknowledged that with so many changes to its way of doing business, there’s a risk Hertz stumbles or something out of its control goes wrong.
“There are lots of moving parts here,” Field’s said. “When there are hiccups, we need to be agile in learning and fixing those things.”
Erik Schatzker
Wed, October 27, 2021
(Bloomberg) -- Hertz Global Holdings Inc., fresh off a blockbuster order for 100,000 Teslas, reached an exclusive agreement to supply Uber drivers with electric vehicles and signed up Carvana Co. to dispose of rental cars it no longer wants.
Taken together, the deals represent a trifecta of aggressive and innovative initiatives with the potential to upend the car-rental business and hasten the transition to greener transportation. The order for Model 3s on Monday, the largest-ever for EVs at $4.2 billion, was such a watershed moment that it propelled Tesla Inc.’s valuation past $1 trillion.
Just as surprising: The company behind it all is barely out of bankruptcy. Only 17 months ago, with the Covid-19 pandemic raging, Estero, Florida-based Hertz was so troubled and its future so uncertain that it sought protection from creditors. Now, under the control of hedge fund and private-equity owners, Hertz is leaning on mobile technology and digitization to transform a stodgy industry known for uninspiring cars and poor customer experiences.
“Our approach is very strategic and very deliberate in terms of how we want to disrupt ourselves and, hopefully, disrupt the industry,” Mark Fields, who’s serving as interim chief executive officer at Hertz, said in an interview. “Instead of asking why, we’re asking why not.”
Under the agreement with Uber Technologies Inc., drivers for the ride-hailing giant who previously had to provide and maintain their own EVs will be able to rent one of 50,000 Teslas from Hertz instead. The program, which starts Nov. 1, is an alternative to buying or leasing, and many drivers may find it more appealing.
Had Uber bought and rented out the Teslas itself, some states might classify drivers as employees. The arrangement with Hertz allows Uber to increase the number of rides taken on EVs without having to change its business model.
“Now is the time to drive a green recovery from the pandemic,” Dara Khosrowshahi, chief executive officer of San Francisco-based Uber, said in a statement.
New Strategy
Partnering with Uber and Phoenix-based Carvana addresses two key weaknesses in the rental industry: asset-utilization -- how actively a car is rented out; and resale recovery -- how much of the purchase price is recouped when the car is sold.
Through the new deal with Carvana, one of the two biggest online car marketplaces, Hertz hopes to eliminate the discounting necessary when selling vehicles from its fleet through dealers and wholesalers. Buyers will be able to pick up cars as soon as the following day. Carvana, home of the car vending machine, earns a commission.
“This provides us with a very effective direct-to-consumer sales channel,” Fields said.
By opening part of its EV fleet to ride-hailing, Hertz aims to maximize revenue per vehicle and improve profit margins. For example, cars typically rented out to leisure customers on the weekend could be used for Uber rides Monday to Friday.
Uber Rates
Under the Uber agreement, drivers will pay a starting rate of $334 a week to rent a Tesla Model 3 with unlimited miles, plus expenses for recharging and incidental damage. That’ll gradually drop to $299. Initially, the program is open only to drivers with a 4.7-star rating and a minimum of 150 trips.
Drivers won’t be able to turn on Tesla’s autopilot feature, Fields said.
Uber is offering drivers a zero-emissions incentive of $1 a ride for using EVs and 50 cents for every rider who chooses to go green. As with all rentals, Hertz covers or absorbs the cost of financing, maintenance, insurance and depreciation.
What Bloomberg Intelligence Says:
“Uber’s partnership with Hertz is probably aimed at fending off disruption from a direct rollout of robo-taxis, built on a network of electric and autonomous vehicles. Renting rather than buying vehicles suggests Uber will keep operating an asset-light model, though high variable costs could be a persistent drag on the contribution margin in the near term.”-- Mandeep Singh, BI senior technology industry analystClick here to read the research.
Hertz has been renting to Uber drivers since 2016. The new relationship builds on that program, adding at least 50,000 Teslas to the pool of available vehicles by 2023 and possibly as many as 150,000. The EVs will be available first in Los Angeles, San Francisco, San Diego and Washington, D.C., with a nationwide rollout to follow in coming weeks.
And because the deal is exclusive, none of Hertz’s rivals in the U.S. can rent Teslas to Uber drivers. They can, however, offer other cars. Lyft Inc. has committed to switch entirely to EVs by 2030.
New Investors
By embracing electrification, Hertz is positioning itself as the green alternative to Enterprise Holdings Inc. and Avid Budget Group Inc. That may appeal to the scores of companies looking to burnish their climate credentials, as well as to consumers wanting to reduce their carbon footprint. According to Uber, drivers who go electric cut tailpipe emissions much more than the average car owner.
Knighthead Capital Management, a distressed debt hedge fund, and Certares Management, a buyout firm specializing in travel, won the bankruptcy auction for Hertz with a $6 billion bid. The initiatives they’ve announced come ahead of a relisting of Hertz shares on the Nasdaq Stock Market.
Early indications are the strategy is paying off. Hertz’s market valuation, based on over-the-counter trading, jumped about $1.2 billion Monday after it announced its deal with Tesla, and stood at $12.9 billion as of Tuesday’s close.
Hertz shares gained as much as 4% in trading Wednesday morning in New York. Uber shares rose as much as 1.2% , while Carvana advanced as much as 5%. Tesla gained as much as 3%.
Fields acknowledged that with so many changes to its way of doing business, there’s a risk Hertz stumbles or something out of its control goes wrong.
“There are lots of moving parts here,” Field’s said. “When there are hiccups, we need to be agile in learning and fixing those things.”
No comments:
Post a Comment