On Tuesday, Hertz announced it is buying 100,000 Teslas as part of a massive push into electric vehicles. This is a smart move by Hertz, because renting electric vehicles, especially in the U.S., is currently very difficult. Not only might people want to rent EVs when traveling, but it’s also an easy, no-risk way to try an EV before buying one.
This was well-received by the stock market and by the general public, because it was an example of a company that was recently on its deathbed doing something forward looking..
Uber had the same idea. On Wednesday, the company announced it has a deal with Hertz that 50,000 of those Teslas will be available for Uber drivers to rent by 2023, part of an ongoing rent-to-Uber program that dates back to 2016. This makes the Tesla purchases even better for Hertz, since it has a built-in customer base for those rentals.
As Uber CEO Dara Khosrowshahi told CNN, the plan is for drivers to rent a Tesla, see how great it is, then buy one themselves: “This is an open doorway for our driver community to try it…If you’ve been in a Tesla, I have, once you try it, you want to buy it.”
Uber is trying to piggyback on the positive press here, casting the partnership as a key part of its pledge to drastically ramp up its drivers’ EV usage, itself a major part of the company’s plan to have all of its rides in “zero emission vehicles” by 2040. The press is often saying the Hertz deal is part of Uber’s push to electrify its “fleet,” but there is no such thing as an “Uber fleet.” Its “fleet” is other people’s cars. So those people have to willingly, of their own volition and using their own money, switch to electric.
The problem for Uber is drivers don’t want to switch to electric cars for good reasons. Typically, they live in and around expensive cities without access to overnight charging and cannot afford pricey EVs. And thus far Uber is only offering piddling incentives like an extra $1 per ride if the rider agrees to pay a higher fee for a “green” vehicle. Uber’s predicament with electrification remains the same as its problem with its business model: It wants drivers to buy EVs but doesn’t want to pay them enough so they can afford them.
Targeting drivers who rent their vehicles for EV adoption embodies this predicament. The rental program is a logical starting place for Uber’s EV efforts, considering Uber owns none of its cars and has never owned any of its cars, so using someone else’s cars is one of the only ways it can get drivers into EVs quickly. But, it is also a program specifically geared towards drivers who cannot afford their own car—”Need a car to earn with Uber?” as the listing page says—so it’s not clear how these people will suddenly go from not being able to afford any gas car to being able to afford a pricey electric car. Not by driving rentals for Uber, that’s for sure.
It’s not even clear renting a Tesla for Uber driving will make much economic sense. “Tesla rentals will start out at $334 a week,” Uber’s press release notes, “and fall to $299 or lower as the program gets underway.” $334 a week compares unfavorably to the $214 a week gas cars are available at through the same program.
But won’t the Uber drivers save on gas, you ask? Not much. These drivers are extremely unlikely to have a Level 2 at-home charger installed the most economical way to charge an EV, both because they do not own an EV and because many Uber drivers especially in the largest markets live in apartments. Even if an Uber driver does have a garage with an outlet, they will barely get any charge from plugging it in overnight from a standard wall outlet. As a result, they’re going to be relying on fast chargers, which are often about the same price as filling a gas tank.
Uber drivers with Pro Gold, Platinum, and Diamond status can save “up to 25 percent” at EVGo chargers, while Uber Pro Blue drivers save “up to 15 percent.” (These statuses are linked to driver points, cancellation rates, and ratings.) Those discounts will help, but may not fully counterbalance the higher weekly rental price of a Tesla versus a gas car. And Uber drivers tend to be deeply skeptical of discount programs and incentives offered by Uber, because the company has a track record of altering the terms or pulling the programs entirely with no notice.
This trust gap, created by Uber’s own mismanagement and callousness for the workers who actually make the company money, is also its largest barrier to EV adoption and all the climate goals it has set for itself. Because the only way Uber can get drivers to switch to electric in the near future is through these types of incentive programs. If drivers don’t believe Uber will stick to them, then there’s not much Uber can do except go on CNN and talk about it.
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