Raphael Stevens

Marine shipping contributes 1 billion metric tons of carbon emissions each year.
The massive cargo ships of today aren’t able to fit at many of the ports around the world.
Fleetzero is attempting to decarbonize the cargo shipping industry with battery-powered ships that could help ease supply chain snarls.

A cargo ship filled with containers moves through New York Harbor as it heads out to the Atlantic ocean on October 12, 2021 in New York City.
Spencer Platt | Getty Images

The dozens of diesel-operated cargo ships floating off the coasts of Los Angeles and Long Beach in California aren’t just emblematic of the snarled supply chain. They’re contributing to the 1 billion metric tons of carbon emissions each year from marine shipping.
Start-up Fleetzero is aiming to provide solutions for both of these problems. Co-founders Steven Henderson and Michael Carter — graduates of the United States Merchant Marine Academy — are building battery-electric cargo ships that will not only help decarbonize the industry but could also ease supply chain bottlenecks by utilizing more of the available ports around the world.

And if that sounds a bit far-fetched consider that Elon Musk said way back in 2017: “Everything will go fully electric, apart from (ironically) rockets. Ships are the next easiest to solve after cars.”
In 2018, the International Maritime Organization, a regulatory arm of the U.N., set an initial goal of cutting carbon emissions from international shipping by at least 50% by 2050 compared with 2008. The problem with reaching that goal, according to Clean Air Task Force research, is that international shipping fleets would need to transition to net-zero carbon fuels.
CATF has cited ammonia as a likely option, though it noted that ammonia is at least triple the cost of conventional marine fuel. “Most of the solutions we’ve read about and seen will all wind up costing the consumer more,” Henderson said. “Either they use a fuel that is a derivative of a fuel we use today, or it’s a fuel that is going to cost more.”
As Henderson and Carter studied the problem, they concluded that the only sustainable way to decarbonize cargo ships is with electricity. “Believe me, we looked at everything including pumping molten salt into ships and cooling it,” Henderson said. Electric batteries became the focus for Fleetzero and the mission was to figure out how to make it cost competitive.
The solution: battery swapping. Fleetzero is experimenting with building electric batteries in standard 20-foot shipping containers which are modified to power smaller ships at sea. When a ship comes into port, the drained batteries in the container carrier are swapped out for new ones.

“Our ships use rapid battery swapping to refuel, and in doing that we’re able to distribute the costs of our batteries over a greater number of shipping containers to a point where we can be competitive with diesel ships,” Henderson said.
Fleetzero is building its first battery pack prototype in Alabama, intending to convert a small diesel ship to use it by the end of 2022. Eventually, the co-founders say they will build their own ships, but for now, they are retrofitting smaller cargo ships that are powered by diesel. “It’s much faster for us to go to market that way,” Henderson said.

Supply chain help

Not only does electrification potentially solve the carbon problem, but using smaller ships could help the supply chain dilemma. Cargo ships, with containers stacked sky-high, have grown bigger every year since the 1950s, Henderson said. And while, pre-Covid pandemic, that brought shipping costs down, it’s also reduced the number of ports around the world where these giants can dock.
“The physical limitations aren’t the size of the ships, but the depths of the ports,” he said. “Long Beach and Los Angeles can handle these big ships, but the whole system isn’t set up to accommodate massive vessels with 20,000 containers on them all at once.”
By using smaller ships, additional ports around the world can be accessed, including big river systems like the Mississippi, said Carter, not only alleviating congestion and backlogs at ports but potentially reducing truck traffic.
Carter and Henderson also point out that electric ships put fewer crew members at risk. “Mike and I both spent years in the engine room of ships crossing the Pacific and Atlantic,” Henderson said. “It’s not a good work environment.”
With less maintenance and repair work than a diesel ship requires, both say they foresee better maritime jobs, less pollution and lower costs.

A focus on emissions

Other companies, including Amazon and Ikea, are pushing the ocean shipping industry to move to zero-carbon fuel sources by 2040, a decade earlier than the IMO’s initial goal set three years ago.
The pledge by these two retailing giants, as well as Patagonia, Michelin and Unilever, to use only zero-carbon fuel ocean vessels is indicative of a broader movement by companies to reduce their carbon footprint around the globe.
Companies have revamped everything from office buildings and warehouses to transportation networks to become more carbon neutral. With the supply chain and cargo ships in the spotlight, it follows that ocean transportation — so dependent on diesel — would be next.
“In order to combat the climate crisis, we must rapidly decarbonize marine shipping,” said Jonathan Lewis, director of transportation decarbonization at CATF, in a statement announcing the consortium of merchants. More

Unlike other VC firms, the so-called World Fund will measure its success on “climate returns,” not just financial returns, Ecosia said.
“Our goal is to solve climate change,” Ecosia CEO Christian Kroll told CNBC.
Kroll said the company is “extremely well connected to a lot of climate start-ups.”

KONYA, TURKEY – SEPTEMBER 13: Rows of solar panels are seen at a Tekno Ray Solar farm on September 13, 2018 in Konya, Turkey. By 2023 Turkey plans to generate thirty percent of it’s electricity from renewable sources in an aim to ease dependence on energy imports from Iran, Russia and Iraq. Due to it’s geographical location, Turkey has the second largest solar energy potential in Europe averaging 7.2 sunshine hours per day. (Photo by Chris McGrath/Getty Images)
Chris McGrath | Getty Images

Ecosia, the search engine that uses its ad revenue to plant trees, has launched a 350 million euro ($405 million) venture capital fund focused on the climate crisis.
The so-called World Fund will invest in the “next generation” of founders looking to tackle the issue, Ecosia said, and will measure its success on “climate returns” as well as financial returns.

“Our goal is to solve climate change,” Ecosia CEO Christian Kroll told CNBC ahead of the launch on Tuesday, just days before the COP26 climate summit.
“We’ve been doing that at Ecosia for a long time by planting trees,” Kroll said, adding that the company has planted 136 million trees so far. “But that alone won’t be enough to solve climate change.”
Research published Tuesday shows that climate tech start-ups have raised more money so far this year than they have in any other year, with $32 billion pumped into start-ups tackling climate change around the world since the start of 2021.

The Ecosia search engine has 15 million monthly active users and it expects to report annual revenues of 25 million euros ($29 million) this year. The size of its user base pales in comparison to Google, however, which has billions of users.
Kroll said Ecosia is “extremely well connected to a lot of climate start-ups” but it’s unable to support them with the money it’s generating through its search engine.

“Our promise to our users is that if you search with us we use the money for tree planting,” he said. “If we were to put that into risky start-ups and it then doesn’t work out then it wouldn’t be so well received.”
He hopes that setting up a separate VC fund that raises capital from alternative sources will help to eliminate this issue.
Bill Gates, the billionaire co-founder of Microsoft, said in an interview that aired Wednesday that climate tech will produce eight to 10 Teslas, a Google, an Amazon and a Microsoft. The people at Ecosia have a similar view, believing that the most valuable companies of the next decade will be those enabling a decarbonized world. 

Cutting carbon emissions

More than half of the funding for the World Fund has already been committed from entrepreneurs and large institutions, Ecosia said, adding that the fund has made three investments that are yet to be announced.
“We’ve invested in a plant-based meats firm revolutionizing the top-end of the market and a cocoa replacement firm that cuts back on deforestation,” said Danijel Visevic, head of investments at Ecosia and head of World Fund.
In total, the World Fund will be used to back around 40 early stage and “growth” stage companies.
One important caveat to note is that every company that World Fund invests in must contribute to a significant reduction in carbon dioxide emissions. Specifically, the Fund will only invest in companies that have the potential to remove 100 megatons of carbon dioxide each year from the atmosphere.
“Everything comes back to that figure, regardless of what the technology is,” World Fund Partner Craig Douglas told CNBC.

The World Fund said it will look to back carbon-cutting companies in food and agriculture, transportation and the “built environment,” among others.
Ecosia claims that the World Fund is the biggest of its kind in Europe, while the world’s biggest is operated by Gates’s Breakthrough Ventures and stands at $2 billion.
Global climate tech VC investment has soared from $6.6 billion in 2016 to $32.3 billion in 2021 so far, an increase in funding by almost five times, according to a report from promo agency London & Partners and VC analysis firm Dealroom.co.
The VC industry has traditionally been somewhat reluctant to invest in climate tech start-ups but Dara Saharova, a general partner at World Fund, said companies in the sector that were founded between 2008 and 2013 now have a market cap of around $800 billion.
“In Europe, there’s a lot of people who invest $1 million to $5 million, and there’s some big institutions now who are willing to put in, you know $30 million plus per company,” Douglas said. “But there’s virtually no one in between.” He added that the World Fund has been created to bridge the gap.   More

Elon Musk’s electric car company reported sales of $3.11 billion in China in the third quarter, or 48.5% of the $6.41 billion U.S. sales during that time, according to a filing Monday.
China’s share in Tesla’s overall sales rose to 22.6% in the third quarter, up from just under 20% a year ago.
Tesla shares hit a record high — and a $1 trillion market cap — in New York trading Monday after rental company Hertz announced it would buy 100,000 Tesla cars by the end of next year.

Tesla China-made Model 3 vehicles are seen during a delivery event at its factory in Shanghai, China January 7, 2020.
Aly Song | Reuters

BEIJING — Tesla’s sales in China are now nearly half the size of what the automaker sells in the United States.
Elon Musk’s electric car company reported sales of $3.11 billion in China in the third quarter, or 48.5% of the $6.41 billion U.S. sales during that time, according to a filing Monday.

That ratio is up from 41.4% a year ago, and less than 10% in 2018, filings show.

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Jeff Bezos’ space company Blue Origin unveiled its plan for a private space station called “Orbital Reef,” which it expects to deploy between 2025 and 2030.
Blue Origin describes the Orbital Reef station, which would be habitable for up to 10 people, as a “mixed use business park” in space.
The company’s primary partner for the station is Sierra Space, a subsidiary of aerospace contractor Sierra Nevada Corporation — with the team also including Boeing, Redwire Space and Genesis Engineering.

WASHINGTON – Jeff Bezos’ Blue Origin unveiled Monday its plan for a private space station called “Orbital Reef,” which it will build in partnership with multiple space companies and expects to deploy between 2025 and 2030.
Blue Origin describes the Orbital Reef station, which would be habitable for up to 10 people, as a “mixed use business park” in space — as well as capable of “exotic hospitality” for space tourists.

Orbital Reef is designed to have almost as much habitable volume as the International Space Station.
The company’s primary partner for the station is Sierra Space, a subsidiary of aerospace contractor Sierra Nevada Corporation, with the team also including Boeing, Redwire Space and Genesis Engineering.
“We’re just beginning to understand the tremendous implications that microgravity research, development and manufacturing can mean, for not only for exploring the universe and making discoveries but improving life on Earth,” Redwire executive vice president Mike Gold told CNBC.
Shares of Redwire Space were halted temporarily by the New York Stock Exchange after surging following the announcement. The stock jumped as much as 40% in trading, but gave up most of the gains to finish the day up 8% at $13.14.

A rendering of the “Ocean Reef” space station in orbit.
Blue Origin

Blue Origin will provide the space station’s “utility systems” and “core modules,” and it plans to use its New Glenn rocket to launch Orbital Reef.

Sierra Space is contributing its LIFE habitat (Large Integrated Flexible Environment; essentially an inflatable space station module) and plans to use its Dream Chaser spacecraft to transport cargo and crew to-and-from the station.
Redwire Space, which went public in September, will run the station’s payload operations and build deployable structures. Redwire also plans to use Orbital Reef for microgravity research, development and manufacturing.
Boeing will build Orbital Reef’s science-focused module and run the station’s operations, as well as conduct maintenance engineering. The aerospace giant also plans to utilize its Starliner capsule for transporting crew and cargo to the station.
Genesis Engineering will contribute its “Single Person Spacecraft” system, which the company describes as an alternative to a spacesuit.

Blue Origin

In a conference call with reporters, executives representing the companies of the team declined to specify how much each expect to invest in Orbital Reef.
Blue Origin vice president Brent Sherwood said the team is not going to give “a specific number” on how much the Orbital Reef space station will cost, adding that the financial numbers are commercially sensitive.
Bezos’ company has been looking at building a space station for more than a year, as CNBC previously reported, and earlier this month added a number of job postings for its “Orbital Destinations” team.

Bezos’ vision: Living and working in space

Founder, Chairman, CEO and President of Amazon Jeff Bezos gives a thumbs up as he speaks during an event about Blue Origin’s space exploration plans in Washington, U.S., May 9, 2019.
Clodagh Kilcoyne | Reuters

Space station race heating up

Blue Origin intends to bid for one of NASA’s expected contracts for the “Commercial LEO Destinations” program, but Bezos’ company is not alone. NASA director of commercial spaceflight Phil McAlister told CNBC last month that the program “received roughly about a dozen proposals” from a variety of companies for contracts.
With NASA planning to retire the International Space Station by the end of the decade, the CLD program represents an effort to turn to private companies for new space stations — with the space agency expecting to save more than $1 billion annually as a result.
“We are in a second golden age of space exploration and development,” Redwire’s Gold said.
Last week, another private space station was announced by a separate team of companies: Nanoracks, Voyager Space and Lockheed Martin are building a station called Starlab, which plans to be operational by 2027.
Starlab is designed to be crewed by up to four astronauts, with about a third of the volume of the ISS.

Concept art of a “Starlab” space station

NASA has already begun funding the ambitions of one company under a separate contract from the CLD program, having awarded Axiom Space with $140 million. Axiom plans to build modules that will connect to the ISS. When the ISS retires, Axiom then would detach its modules and turn it into a free-flying space station.

An illustration of three of the company’s modules connected to the International Space Station.
Axiom Space

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A new study found that nearly two-thirds of long-term Covid patients reported “brain fog,” which included memory loss.
“Our work and the work of others has shown that this affects people’s abilities to make plans, synthesize information, and do their daily activities of work,” said David Putrino, the Director of Rehabilitation Innovation at Mount Sinai Hospital in New York.
“It is affecting people of all ages and it doesn’t seem to discriminate on who it’s going to strike down after an acute event,” said Putrino.

The author of a new study discussed the damaging impacts for “long Covid” patients, people whose symptoms last months after initially becoming infected.
“Our work and the work of others has shown that this affects people’s abilities to make plans, synthesize information, and do their daily activities of work,” said David Putrino, the Director of Rehabilitation Innovation at Mount Sinai Hospital in New York. “They suffer from a lot of memory loss and inability to form new memories, as well as difficulty with speaking. This is a very debilitating condition with serious cognitive conditions.” 

In Putrino’s study researchers examined how long Covid can affect people’s ability to work, and they found nearly half of all “long-haulers” surveyed said they were not able to return to full employment. The study also found that nearly two-thirds of long-term Covid patients report “brain fog,” which includes memory loss. 
Putrino underscored to CNBC’s “The News with Shepard Smith” that long Covid is a “very real problem,” and that more attention needs to be paid to providing long-term care to impacted patients. 
“It is affecting people of all ages and it doesn’t seem to discriminate on who it’s going to strike down after an acute event,” said Putrino. “We need to organize, and we need to start getting government groups involved in providing long-term care for patients who have been sick over a year now with no real end in sight.”

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The rental car industry’s major players have not made major commitments to electric vehicles as part of their fleets to date.
The Hertz deal with Tesla will pressure its competitors like Avis Budget Group and Enterprise Holdings to more seriously consider adoption of EVs.
Enterprise tells CNBC it is planning to transition its fleet “over the coming years” but the “focus is not on simply adding numbers,” and its research shows range anxiety and lack of public charging remain major consumer concerns.
Government scrutiny of rental car emissions and consumer interest in EVs will continue to grow, says Northcoast Research analyst John Healy.

Jeff Greenberg | Universal Images Group | Getty Images

The economics of the rental car industry give companies including Avis Budget Group and Enterprise Holdings multiple reasons to go slow on the adoption of electric vehicles. Just think of how much money they make every time a renter forgets to return a car with a full gas tank. But on Monday, the rental car companies received the biggest reason yet to move quicker to EVs as part of their fleets. The deal between Hertz and Tesla for 100,000 vehicles is a signal to the major car rental companies that a strategy for EVs is going to be needed, and maybe sooner than they had planned on it.
It was not a surprise to auto industry analyst John Healy of Northcoast Research that Hertz is the first among the small group of major rental car companies to place a big bet on EVs. After an era of industry consolidation, the three companies represent as much as 95% of the car rental agencies at an airport terminal: Enterprise owns Alamo and National; Hertz owns Dollar and Thrifty; Avis combined with Budget. But it’s only Hertz that has offered EVs in any significant way to date, and its focus was limited to the niche market of luxury renters using its premium services such as Ultimate Choice.

“There hasn’t been a lot going on in electric,” said Healy.
That “ultimate” vehicle category offered consumers access to high-end electric cars from Porsche and Tesla, among others, but the numbers were at the level of a “few hundred” in the fleet versus the 100,000 Teslas in the Hertz deal. “They were trying to make money renting cars, not meet this niche,” Healy said of the main competitors. Hertz saw the affluent renter combined with an EV “intrigue” factor as enough of a reason to experiment on the margins of the business, “but nothing more than that,” Healy said.

Energy transition and Tesla rentals

“Our focus is not on simply adding numbers, but on working thoughtfully with industry partners and stakeholders to drive the long-term viability of EVs,” said an Enterprise Holdings spokeswoman in a statement emailed to CNBC. “This includes making sure the grid and charging infrastructure are prepared.”
She added the company started working this year with a top consulting firm in Europe to better understand how it can transition its business model, operations, and infrastructure to operate with more EVs. In the U.S., the company has rolled out thousands of EVs, she said, providing them to employees and putting them into the rental fleet in select markets to test EVs “as we transition our fleet over the coming years,” she wrote.
Avis Budget did not respond to a request for comment.

If demand hasn’t been there yet to justify a major spend on an EV fleet, the Hertz deal may be the signal that the time has come. But there are big economic hurdles for the rental car industry to overcome that are related to hesitation about EVs to date.
As Hertz prepares to re-IPO after restructuring under private equity investors and with former Ford CEO Mark Fields in as interim-CEO, the Tesla headline gives it another way to differentiate itself in a consolidated rental car space. But ultimately EV fleets are an issue the major rental car companies are all going to need to work through as part of sustainability commitments and new economic thinking.

Scale of rental car fleets was once thought ‘untouchable’

Dan Ives, analyst at Wedbush Securities who covers Tesla, said the rental car fleets were always viewed as “untouchable” because of the scale of their bulk purchases. “The fact that Hertz dove into the deep end of pool and is spending over $4 billion, that was never even on the radar for the likes of a Tesla,” he said. But now it represents a tipping point not only in EV interest from the market but the supply that Tesla can produce with its factory operations expanding around the world and, within the U.S., to Austin.
The rental car industry represents 1.5 million to 2 million cars per year, a significant part of new sales. 
“For Tesla that is 2 million cars that were never on the radar,” Ives said.

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Tesla reached a $1 trillion market capitalization on Monday after the deal was announced.
“This announcement is a clear signal from Tesla that they can deliver a large volume of vehicles,” Jonathan Smoke, chief economist at Cox Automotive, wrote in an emailed statement to CNBC.
The Hertz-Tesla deal is for Model 3 sedans, but size of EVs for rental has been an issue beyond the luxury market, with the sedans too small for many renters’ preferences, but that is changing with the production of more crossover EVs and other hybrid vehicles. The crossover utility segment accounted for 50% of EV sales in the second quarter.

Carbon emissions and the car rental industry

While the carbon footprint of the car rental industry has not been a primary focus of the U.S. government, the pressure is expected to increase in the future and there has been talk among those who follow the industry, Healy said, that President Biden wants the rental car companies to commit to electric vehicle fleets.
“The government push is yet to be determined but it’s probably not going away,” Healy said.
The car rental agencies have sustainability in their business models, such as Enterprise’s carbon offsets program and a longstanding research affiliation it has in the biofuels area. Enterprise has reported on Scope 1 and Scope 2 carbon emissions for years, but not the scope 3 emissions that occur at the tailpipes of its fleet cars. Avis Budget also offers carbon offsets, carbon footprint estimates for corporate clients and cites its acquisition of car-sharing company Zipcar as part of its sustainability initiatives. Avis Budget reports 21,000-plus hybrid vehicles in its fleet globally.
Shareholder advocates focused on ESG have pressed the issue with car rental companies in recent years, asking the major companies to increase EV purchases. A Hertz shareholder climate resolution in 2020 included EVs as part of a broader discussion on climate change. “Hertz’ standard rental car business currently has only three hybrid electric vehicle options at select locations for consumer rentals, with no all-electric vehicles. While Hertz has taken steps to improve energy efficiency for its operational facilities, the impact of the company’s fleet remains insufficiently addressed,” shareholder advocacy group As You Sow wrote in the 2020 measure.
Driss Lembachar, manager of transportation and infrastructure at Morningstar’s Sustainalytics ESG risk evaluation business, said car rental companies are less exposed to car emissions than automakers, given that the ultimate responsibility for emissions and meeting fuel economy standards from a regulatory point of view mainly rests with car manufacturers. But the fuel efficiency and age of a car rental company’s fleet and its renewal (or lack thereof) is material to investors since these areas impact its attractiveness and customer satisfaction/retention levels.

EV sales continue to rise

Sales in the U.S. of zero emissions cars continue to rise, with more than 168,000 zero emission vehicles (battery, plug-in hybrid, and fuel cell electric vehicles) sold in the second quarter of 2021, a 33% increase and 122,000 units more than the same period in 2020, according to industry trade group Alliance for Automotive Innovation. It noted Q2 2021 sales represented 3.8% of the auto market, their highest percentage ever. The auto industry is investing $330 billion in electrification by 2025 and it forecasts more than 130 zero-emission vehicles and 30 hybrid-electric models will be available in the next five years.
The Enterprise spokeswoman said one of the challenges is transitioning to EVs for rental use cases outside large corporate or leased fleet deals. Its research has found that range anxiety is still top of mind for customers, as is the lack of public charging points. She noted that short distance rentals make up only 20% of Enterprise’s business.
The upfront expense for the rental car companies from EV adoption, not only in the purchase price of cars, but in the build out of the charging station infrastructure they would need, have been major reasons for moving slowly, and the current economics of the rental car business makes staying with gas-powered cars attractive. Rental companies make money every time a car is returned without a full tank of gas, and while that represents only about 5% of total revenue, according to Healy, it is high margin revenue. While business models can presumably be developed to charge for “topping off” an EV, there is no established practice for that today.
That is one of the unknowns the rental car agencies are going to experience in a steep learning curve for fleet management with EVs. The timing of EV charging has to be taken into account as part of moving cars in and out of agency lots, and there are basic questions they still can’t answer: how many charging stations will they need, and how many will have to be fast-charging. It takes two minutes if not less to put gas in the car, but it could take hours to charge a car and that time differential could be significant in meeting customer demand.
Enterprise noted that approximately 25% of vehicles are turned around, cleaned and re-rented within 1 hour, presenting unique charging needs for large fleet operators.
Analysis of older EVs in recent years as Tesla customer service received scrutiny showed that they can present a unique maintenance and servicing profile. Hans-Werner Kaas, Senior Partner at McKinsey and Company, told CNBC in 2019 that fixes for EVs may be less frequent overall, but more expensive, and equipment including ride control and tires may require more frequent service or replacement due to the higher curb weight and acceleration of electric vehicles. That could offset the potential economic advantages that EVs offer rental car companies on traditional engine maintenance issues, but there is also the residual value of cars that could hold up better. At least to date, all of the unknowns associated with unit economics on EVs have taken precedence over potential economic benefits.
“Their view was that there is not enough infrastructure and no salivating custom that wants it, so why change anything?” Healy said. “There view has been ‘we will wait and see, but now is not the time.”
For Hertz, in process of coming back to the public market with an IPO, the timing is good for a big announcement related to its positioning versus competitors.
The major car rental agencies have tended to follow each others’ moves in recent history whether it is marketing approach or how they charge customers for various services, and with the space consolidated among the major three players, there will be pressure on Avis Budget and Enterprise Holdings to make moves in the EV space. That could be with Tesla, though they might be getting in line for deliveries behind Hertz, or the major automakers, including GM and Ford, planning to produce a large number of EVs in the years ahead. Rental car agencies have historically focused fleet purchases on the U.S. automakers before adding units from overseas.
“I would think Avis and Enterprise need to respond with something,” Healy said. “This has been a been copycat business for the last 50 years and that won’t change.” 
Ives cited a saying about the car industry, that with bulk orders there is never just one. “I would be shocked if the other competitors of Hertz haven’t put in calls to Tesla,” Ives said.
With a changing consumer landscape and more interest in EVs, the rental car agencies will risk losing business if they move too slowly. Healy expects more consumers in the future will be willing to pay extra to try an EV. “If I can rent a Tesla for an extra $40 a day at Hertz … and Avis doesn’t have it, I might try. … There is a customer who will respond to this and on the margins, Hertz is in a better spot.”
For Tesla, the deal is a good way to introduce consumers who have never driven an electric vehicle before to the technology, especially as the sales prices of EVs relative to traditional cars come down to a level where there is more room for mass adoption.  
“Every consumer that gets into a rental car car could be a conversion to a buyer … it’s an extended test drive,” Ives said.
If the rental car industry remains hesitant, it isn’t because the companies lack the money to spend on EVs. “The industry has never been more profitable,” Healy said. Amid the chip shortages that have limited car production, fleet size is only up 15% against demand that is now back up to 80-85% of the pre-pandemic level, according to Healy. The value of the cars on their balance sheets also have been appreciating in contrast to the typical depreciation they would expect in used cars.
The coming quarterly results should show record profitability and in the current market of high demand and limited car supply, the rental car companies are able to charge as much as double what would have been normal pricing in the past. “If you need the minivan in Florida you are going to pay $100 rather than $75 a day,” Healy said.
There also isn’t much else out there for these companies to buy even as their balance sheets are strong with the industry controlled by the three main players, making more consolidation less likely.
Healy said more changes are occurring across the auto landscape and beginning to get the focus from the businesses ancillary to the carmakers. He covers the auction space and noted that Manheim, the largest auction house, recently said in an investor presentation that it will retrofit 53 auction locations with 127 EV stations for charging and the diagnostic work on battery condition it needs to perform to properly assess the value of an EV up for auction. “We starting to see some change among adjacent companies in the industry,” Healy said.
This story has been updated to include comments from Enterprise Holdings. More