Car rental companies are beginning to shift to electric, though undergoing this dramatic transition is proving to be a monumental task. It requires an enormous amount of government resources and commitment by both the public and fleet operators alike.
“When change is coming toward you, you have two choices; you can engage or you cannot engage.” said Sharky Laguana, president of the American Car Rental Association (ACRA) and founder and CEO of Bendago and Campago. “If you engage, you have the ability to influence what happens. This moment in front of us is going to be the most significant transition we’ve seen since a bicycle shop in Minneapolis decided to start renting Model Ts in 1904.”
Laguana moderated the ACRA session, titled “Electric Cars Are Coming — Are We Ready?” at the 2022 International Car Rental Show in Las Vegas. The panel featured Ben Prochazka, executive director for the Electrification Coalition; Kandee Worley, planning chief for electric vehicles for the Nevada Department of Transportation; and Sam Baker, sustainability program administrator for Clark County, Nevada.
The panel outlined three major components to fleet electrification: The first is consumer acceptance, which has gained ground in recent years. The next is engaging on infrastructure. Fleets must ensure their local utility companies can actually supply the necessary power reliably. Finally, the ongoing supply-chain problem must resolve, which will require government assistance.
Getting an EV Program Started
Electric vehicles are currently at 3% market share, but that figure is expected to climb dramatically in the next five to eight years, according to Prochazka. Global automakers are investing billions of dollars to transition their fleets. Many OEMs have said they’re no longer going to invest in the R&D for internal-combustion engines (ICE) because they see the direction the industry is headed.
Car rental operators should start learning and understanding the ecosystem now and get themselves in a position to acquire the vehicles. There’s going to be a lot of competition and operators need to understand how to take advantage of incentives to build infrastructure.
“It’s kind of like construction,” Prochazka said. “The best time to do construction was five years ago because the costs only continue to increase over time.”
First, fleet operators must determine how to bring EV rental cars into the fold and what challenges exist, then develop a pathway for what the transition will look like, Prochazka advised. In the early stages, it will probably be 2% to 5% of their fleet, and that percentage could quickly escalate.
Also, when someone shows up to rent an EV, they’re expecting an EV, so, fleets must rethink how they handle their inventory and retrain their staff so that they’re ready for the transition.
Baker outlined how state and county governments are aligning on electrification and how they’re working with car rental partners.
In 2019, the Board of County Commissioners directed Clark County, Nevada, to put together a sustainability and climate action plan, which meant rebranding the Department of Air Quality to the Department of Environmental Sustainability.
“As part of the plan, we have formed a transportation electrification working group to find solutions to some of the challenges we face with building the infrastructure for EVs,” Baker said. “Right now, we’re mostly focused on light-duty and passenger vehicles. As we move into phase two in 2023, we’ll work with our partners at the airport to see how we can electrify their rental-car fleet.”
Accommodating More Power
A key part of the beginning stages is determining power needs to charging infrastructure, which depends on the operator’s operational profile, according to Prochazka.
In an airport situation, the vehicles come through the door and often need to go back out 15 minutes later. DC fast chargers charge vehicles in 20 to 30 minutes from 10% to 80% — yet are substantially more expensive than Level 2 chargers.
“Is it about having DC fast charging that’s a part of a shared turn system, or do you have Level-2 charging at each stall where you’re parking the vehicles at the facility? This can impact what costs exist and how to think about power distribution,” Prochazka said.
As well, operators need to understand if the current power to their location for EV charging is sufficient to accommodate growth. If not, utilities need to get involved early and added costs and time must be assessed.
When consumers rent an EV, they’ve already decided they’re going to go through this experience, but then they get to the rental counter, and small snafus can crater their confidence in that experience, according to Prochazka.
So, if the employee doesn’t know anything about charging or range, it begins to deteriorate the consumer’s confidence. Those who drive an EV know how charging works; it becomes demystified almost immediately, but charging sounds complicated to those who have never driven an EV.
Last November, the government passed the Infrastructure Investment and Jobs Act (IIJA), which gives the Nevada Department of Transportation $7.5 billion in the next five years to build the infrastructure within the U.S., according to Worley. The goal is to hit 500,000 charging stations by 2030 with the requirement that they’re located within a mile from the interstate and every 50 miles.
The majority of Nevada is desert, so there are many areas where there’s no electricity. Electrical providers within the state are working toward getting the infrastructure where it needs to be so that charging stations can be built.
Another industry challenge is charging equipment standardization, said Worley. Tesla uses a proprietary connector, while other OEMs in U.S. and Canada use the J1772 connector for Level 1 and 2 charging and SAE Combo (CCS) for Level 3.
While there are substantially more public charging stations for Teslas, the State of Nevada is looking to give them “a run for their money,” she said, adding that the department has been in touch with Tesla to coordinate buildout overall.
Unlike gas stations, charging stations don’t need supervision on site. But gas stations do present an opportunity when it comes to EV charging: The Nevada DOT is actively seeking partners in the gas station industry because the infrastructure is already there and they have electricity.
“A gas station owner once told me they don’t make their money selling gasoline; they make their money selling chips, candy and soda,” Worley said. “So, they want people to be in their parking lot. There’s been a bit of pushback from the industry, but we’re starting to see it turn because they understand the focus is shifting to electric vehicles.”
According to Worley, Clark County accommodates not only electric vehicles, but also alternative fuels, so the county is looking at several options.
“We serve as the freight line from the California ports to the east, so our roads have to be ready for both passenger vehicles and the trucking industry,” Worley said. “We’re trying to cut greenhouse gas emissions in all fields.”
Reducing oil dependency isn’t as easy as drilling for more oil domestically, Prochazka asserted, as oil is an international commodity that is manipulated by geopolitical events such as the Russia-Ukraine war.
An independent car rental operator in the audience pushed back on this assertion. His response crystalized the notion many aren’t ready to embrace the shift — and are vocal about expressing their animosity to what they feel is a new technology being pushed on them.
The operator asserted that the Biden administration, by canceling the Keystone Pipeline extension and other actions, has artificially propped up the EV market. “I pay $5.86 a gallon; I’ve never paid that in my life,” he said. “How are we going to push electric cars? Well, let’s just shut off the oil.”
While Hertz can afford more expensive EVs, smaller operators might not, he said. “How do you expect us to survive buying all these fuel-efficient cars?”
Laguana responded generally about the need to work together, even with leaders advocating policies that aren’t our own.
Prochazka pointed out that the auto manufacturing business is all in on electrification, and that won’t diminish. He also pushed back on who’s in control: The U.S. imports one-fifth of its oil and the cartels control its supply and price. “The U.S. is powerless to stop or control it,” he said. “The idea behind electrification is that it removes the U.S. from that monopoly.”
Prochazka said that the U.S. has an opportunity to lead, but if not, China and other countries are going to step up when it comes to the future of transportation.
“This isn’t a target against oil companies,” he said. “It’s about the idea that we put our country at great economic and national security risk. We spend $80 billion a year sending young men and women to protect the flow of oil in this country. ... We don’t want this to be an ideological argument; this is about what’s going to be better for the U.S. in the long term.”