With growing environmental concerns and advancements in battery technology, the simple battery-powered golf cart has transformed into a quasi-street legal cruiser with car-like features. In 1998 the National Highway Traffic Safety Administration (NHTSA) designated a new class of motor vehicle, the low-speed vehicle or neighborhood electric vehicle (NEV), and allowed them on streets with a maximum posted speed limit of 35 mph.

This opened transportation possibilities in tourist areas and beach communities looking to curb congestion by using alternatives to traditional gas-powered autos.

Rental agencies—from San Francisco, Maui and Key West to the islands off the coast of Georgia and Texas — began springing up to meet the need.

Golf Carts – the Next Generation

The latest NEVs are governed to reach a top speed of 25 miles per hour and hold a charge for 30 to 40 miles. Most can be fully recharged with a standard 110-volt outlet in about seven hours. They run on traditional deep-cycle lead acid batteries, which provide an average life expectancy of three years.

Models vary by manufacturer and range from two to eight seats with various storage configurations.

To satisfy NHTSA’s safety criteria for street operation, NEVs are equipped with three-point seat belts, windshields and windshield wipers, running lights, headlights, brake lights, reflectors, rearview mirrors and turn signals.

Most NEVs, especially those used for tourist rentals, are doorless open-air affairs, though a market is being established of electric vehicles that more closely resemble cars. These all-season vehicles have fully enclosed aluminum alloy frames, sophisticated batteries, longer charges and features such as heat, air conditioning and audio systems.

Major manufacturers include Chrysler-owned Global Electric Motor Cars (GEM), ZAP, makers of cars and scooters, Columbia ParCar, Dynasty Electric Car, Barton Investment Group and Miles Electric Vehicles, to name just a few.

Satisfying the Island Demand

Chris Godfrey, David Scarbrough, Brent Palmer and Scot Harris, co-owners of NEV rental operation Red Rock Electric Company, started renting NEVs in the Savannah, Ga., area and nearby Tybee Island in June 2007.

Red Rock rents the GEM four-passenger e4 but has plans to integrate a model with a back bed to include two surfboards with the rental of the vehicle.

“We bought some used 2005 GEM models with 7,000 miles already on them and they are still our best running vehicles,” Scarbrough says. “Our four brand-new 07s are still working toward their full charge range, but we have no complaints.”

Integral to Red Rock’s startup were fellow Georgia NEV renters Clayton Porter and Richard Van Iderstyne of Jekyll Island-based Red Bug Motors. Initially started as a means of shuttling people from the island’s airport to their lodging destination, the guys at Red Bug soon recognized the demand for the cars from all visitors.

When developers wanted to tear down the Jekyll Island airport to build condominiums in its place, retirees Porter and Van Iderstyne took matters into their own hands to stave off the developers and attract more visitors. To do that, a pilot told them the island needed better and more transportation options.

From there Red Bug was born in April 2006 with just 10 GEM vehicles. Now 30 vehicles are split between the two locations on Jekyll Island. Three new operations are set to open in January 2008.

Red Bug’s NEVs are legal on any street on the island since the maximum speed limit is 35 mph.

On another island about 30 miles from Corpus Christi, Texas, Kathy Wilson and Jim Gaw purchased the NEV rental operation Nautical Wheelers in March of 2004.

The Port Aransas business rents 40 Barton Investment Group-manufactured NEVs that look and run very similarly to the GEM models.

Attracting the Impulse Renter

Unlike a standard car rental booked in advance, NEVs are more of an impulse rent. Red Rock, Red Bug and Nautical Wheelers all have Web pages, though Red Rock is the only one that takes online reservations.

These companies rely heavily on reaching vacationers after their arrival.

Every hotel on the island is equipped with electric vehicle charging stations. “The hotel owners on the island have been very helpful in advertising our car to their guests,” Porter says. “They market it as another offered amenity.”

Porter says Red Bug will also pick up travelers at the Jekyll Island airport and take them directly to the rental location.

Wilson and Gaw knew they needed to take action to boost business when not even three weeks after they took the business over, a gas-powered golf cart rental operation set up shop in the same town.

“We have gas-powered golf cart competition here, but in our opinion their vehicles aren’t street legal or as environmentally friendly,” Gaw says.

The vehicles themselves are the best advertisement, say Gaw and Wilson. To market the business the couple decorated the cruisers in bright paint and an eye-catching design and gave each one a unique name.

“We have a prime location on Main Street, right next to the only grocery store in town and just blocks from the beach; everyone can see us,” Gaw says. “The kids love the cars and ask for the same one by name, year after year.”

The previous owner of Nautical Wheelers spent a month working with Gaw and Wilson to teach them the ins and outs of the business before handing over the reins. [PAGEBREAK] Running the Numbers

A lifecycle analysis of an NEV is easy to calculate. A two-seat GEM e2 base model costs $7,500. To operate that one vehicle for three years, assuming $900 for insurance costs, $90 in electricity and driving 3,600 miles, would cost a total of $4,490, plus minimal maintenance costs.

However, a base utilization rate is difficult to pin down because there are so many variables to consider, report both Red Bug and Red Rock owners.

“We’re young in the business and simply supplying the demand right now,” Porter says. “As the island grows, we plan to grow with it.”

To determine Red Bug’s rental rates Porter divides the total cost of the unit by the estimated number of months he intends to keep the vehicle in the rental pool, and then adds a profit.

Currently, Red Bug offers the GEM e2 for $75 per day and the e4 for $95 per day.

Just to break even, Godfrey of Red Rock says he needs to rent out his entire 10-vehicle fleet for five full days every month.

“A quarter of our month is dedicated solely to satisfying our overhead,” Godfrey says. “Anyone trying to get into this business should know it’s expensive.”

Red Rock calculates rental rates by comparing prices to the $25 per-person guided bus tours that are offered throughout downtown Savannah. Since Red Rock rents four-person GEMs, the $25 per-person fee equals their $100 per-day rental rate.

The guys at Red Rock understand that their NEV rental operation is more of a novelty than simply a mode of transportation.

“Sure, tourists could come to this area and rent a Hertz economy car for $25 a day,” Scarbrough says, “but our small cars are more expensive because you’re getting an enjoyable, open-air experience.”

At Nautical Wheelers, Wilson and Gaw rent their bright little beauties for $135 for eight hours and $175 for the full day.

“With older people moving into town there has recently been a proliferation of golf cart-type vehicles in the area,” Gaw says. “We think our vehicles are very well made and we’re very pleased with them.”

Surviving the Winter

Due to the open-air style of the NEVs and the tourist towns they inhabit, NEV rental companies experience a lull in the off-season.

In-season, Godfrey says they flirted very close to breaking even, but it was a different story once November hit. They thought about employing heaters and doors on the vehicles but soon realized it wouldn’t be worth the costs.

“We are really cutting back this winter because of the drop-off in business,” Godfrey says. “We’re working toward expanding into franchising to try and help get through the winter.”

With an IT background, Godfrey has developed the software system used to conduct everyday business at Red Rock. He says it is easily expanded if franchising does become a reality.

Some operators look for other revenue streams from November through March. As a licensed GEM dealer, Red Bug handles the dip in seasonal business through NEV sales.

“We can sell our rental inventory when we need to,” Porter says. “Last year we sold the used GEMs, but this year we will be moving those models to our new locations and selling new ones.”

Red Bug sells mostly the GEM e4, as well as the GEM e2 and Gem e6. The eL truck version is most popular with commercial customers, according to Porter.

As a manufacturer, GEM has seen the market grow for used NEVs.

“There are many retirement community residents that are looking for a GEM, but may not be in a position to invest in something brand new,” says Belinda Forknell, marketing manager for GEM. “They are a great target market for moving used GEMs and present an opportunity for the rental owner looking to turn used vehicles.”

In the off-season, Nautical Wheelers cuts its hours from seven to six days a week, yet maintains the same fleet size year round. Nautical Wheelers also rents bicycles, which tend to do more business in the fall and winter months. They also sell bike accessories, T-shirts, sandals and beach music.

Additionally, many NEV rental operators offer discounted rates during the winter months to attract business.

For the Green of It?

Despite the fact that NEVs are zero-emissions vehicles, for now the public seems to be more intrigued by its fun design than its sustainability.

However, there is an undeniable growing interest in “renting green” as more people become aware of electric vehicles as transportation options and start to make more green-conscious decisions in general.

“The interest and demand will continue to grow as more people decide they want to make a difference by reducing fuel consumption and conserving energy in an effort to lower the impact on the environment,” says Forknell of GEM.

Renting NEVs, Godfrey says, is a way to introduce people to the concept of electric vehicles and enables them to see that one day these tiny cars could be a viable transportation option.

“If you can run an economically successful business while also helping the environment, that’s great,” Godfrey says. “Our green vehicle initiative is definitely something that we market.”

The Future of Renting Electric

Aloha Toy Store on Maui, Hawaii, is living up to its slogan: “We look to the future, and the future is here today.”

Aloha is the first electric car company on the island, and owner Marty Wynn has been renting electric vehicles since 1999. Along with a full line of GEMs, Aloha Toy Store also rents two-wheeled Segway Human Transporters. The company plans to rent Phoenix Motorcar’s new freeway-speed electric car starting in the first quarter of 2008.

“The vehicles we’re renting here are at least 10 years in front of what everyone else is renting right now,” Wynn says.

The Phoenix Motorcars Sport Utility Truck (SUT) runs on an advanced lithium titanate battery pack system and boasts a top speed of 95 miles per hour and a 120-mile range on a single charge. The car lists for $45,000.

Wynn knows the Phoenix SUT will not immediately return the investment—the goal now is to introduce these new types of electric vehicles through rental.

Other electric vehicle manufacturers such as Tesla Motors and Miles Electric Cars are also developing all-electric sedans and sports cars.