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Tuesday, 29 October 2013 15:02

The Car Rental Industry and Electric Vehicles

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In 2010, led by the Nissan Leaf, the world was introduced to the first batch of affordable, practical and commercially available electric cars. Motivated by an increasing global focus on sustainability, the introduction of these electric vehicles (EVs) signified a massive step forward for green motoring. 

electric vehicles sign

Image by David Megginson

Caught up in the excitement, the car rental industry soon jumped on the band wagon and started to introduce electric cars into their fleets. But after more than three years since they were first integrated into the market, how successful have they proven to be with rental customers?

Expense

Although the sale price of electric cars have begun to drop slightly, at present EVs are a lot more expensive to buy then their direct petrol-run counterparts. For example, the second generation of the battery-powered Nissan Leaf, released this year, costs between £25,990 and £30,490, which is significantly more than Nissan’s own five-door petrol equivalent, the Note.

The high price of electric cars had initial positive implications for the car rental industry, as people who were intrigued by the technology hired electric cars out for an ‘extended test drive.’  However, once the initial intrigue passed, the expense – which is passed on to the customer through higher rental fees in comparison to petrol run cars – has increasingly put customers off.

The government’s desire to get more low emissions cars on the road has led to the introduction of Plug-in Vehicle Grants, which reduces the cost of buying an electric car by 25% and a van by 20%. This, alongside a constantly maturing technology that is becoming cheaper to manufacture, will in time see electric cars become cheaper to buy. And when the savings are passed onto rental customers, the cost of renting an electric car will become less of a barrier.

Range Anxiety

The battery which powers the car itself has a significant deciding factor in how the car is used. Nissan claim that the new Leaf model of their EV can achieve between 105-113 miles when fully charged and in optimum conditions. This, of course, imposes limits on how the customers can use a rental electric car. Because the battery of an EV isn’t optimised for long-distance travel, anxiety among renters is created by uncertainty and confusion over whether and where they’ll be able to recharge.

At Enterprise, the biggest rental car supplier in America, customers are bringing their electric vehicles back early and swapping them for a petrol run car because of range anxiety. This is evident in the average lease length for both types of vehicle from Enterprise customers, with conventional vehicles averaging six to seven days and electric cars only 1.6 days.

The fact that in the UK Europcar have recently removed electric cars from their fleet less than a year after going on record praising them, suggests similar concerns are plaguing the market on the opposite side of the Atlantic too.

Is Range Anxiety Signalling the Death Knell for Electric Cars in the Rental Industry?

Electric cars, in their recent reliable, road-worthy form are relatively new to the market. As such there is a lack of general understanding – and to a certain degree supporting infrastructure – that is making concerns surrounding range anxiety valid. However, both the UK and America are making a concerted effort to improve EV infrastructure.

As part of a broader initiative for improving the development of ultra-low emission vehicles in the country, the UK government have made an extra £37 million available to use for installing electric vehicle charge points. There are now 10,000 charging points across the UK, with more set to be integrated at key locales such as railway stations and car parks.

Meanwhile, Drive Electric Orlando, in one of the largest rental markets in the world because of Disney world, is trying to encourage more tourists to hire electric cars. A major component of this, and something that will probably ultimately determine its success, is the installation of chargers in key locations such as hotels, theme parks and the convention centre.  

The collective up-shot of such initiatives is that they will help concerns such as range anxiety become a thing of the past. And this can only have positive repercussions for the number of people that would have confidence in renting an electric car.

In Summary  

The electric car market is relatively new and its widespread adoption (including within the car rental industry) has been lower than expected.  Expense and the range limitations present two of the main reason for this. However, if costs continue to fall and the charging infrastructure continues to improve at its present rate, the more widespread adoption of EVs within all areas of the market should still happen.

Last modified on Friday, 07 March 2014 09:27
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