General Motors has agreed to sell up to 175,000 electric vehicles to Hertz Global over the next five years, according to CNBC.
The network says the deal between GM and Hertz calls for GM to start supplying electric vehicles such as the Chevrolet Bolt EV and Bolt EUV to Hertz starting in the first quarter of next year. Those vehicles are expected to be followed by newer EV models on the company’s ultium battery technology, such as the Chevrolet Blazer, Chevrolet Equinox and vehicles from GM’s other brands.
CNBC noted GM is expected to significantly increase its production of all-electric vehicles in the coming years, as North American output of the cars and trucks — as well as the battery cells used to power them — increases. The company plans to reach production capability of one million EVs each in North America and China, by 2025.
According to the financial network, GM is the latest automaker to strike such an agreement with Hertz, following Tesla and Polestar, a Volvo-backed electric vehicle startup. Those agreements were for 100,000 and 65,000 vehicles, respectively, making GM’s deal the largest of the three.
“Our work with Hertz is a huge step forward for emissions reduction and EV adoption that will help create thousands of new EV customers for GM,” said CEO Mary Barra in a statement.
CNBC says Hertz has made increasing its fleet of electric vehicles a priority following its emergence from bankruptcy less than a year ago. The debt-laden company was an early victim of the coronavirus pandemic but has since recovered amid surging demand in travel and supply chain issues. The problems have resulted in lower inventories but higher profits for rental car fleets.
The companies declined to release financial details of the deal, according to the network. Steve Carlisle, GM’s president of North America, said the company plans to sell the EVs around “retail margin” rather than discounted fleet sales.
“It is good business,” Carlisle told reporters during a call, according to CNBC.
Shares of GM and Hertz were relatively unimpacted by the announcement, the network noted. Both were down midday Tuesday amid a broader market decline.
According to CNBC, Investors have traditionally frowned upon automakers when they sell large numbers of vehicles to daily rental fleets because cars and trucks sold to rental companies are usually sold at a discount, with such deals used to reduce bloating inventories and increase their total vehicle deliveries. However, shareholders and analysts have responded favorably to automakers such as Tesla selling EVs to Hertz, viewing the move as a sign that battery-electric cars were going more mainstream.
Hertz aims to have a quarter of its fleet be electric by the end of 2024, while GM has announced plans to offer only electric vehicles by 2035.
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