Volkswagen Nervous about Expanding Electric Production for Car Rentals
May 8, 2019
German automaker’s green lineup noticeably absent from car rental fleets
Enterprise has electric vehicles like the Nissan Leaf and the Tesla Model S in its fleet. Avis boasts a green arsenal that includes the Leaf as well as the Toyota Auris and the Hyundai Ioniq. And with domestic automakers planning to roll out electric cars, such as General Motors’ plan to make its Cadillac line totally battery-powered, car rentals might even consider adding those models once available.
But so far, electric cars created by Volkswagen aren’t likely to be snared by car rentals in the near future. Even though it rolled out the fully electric version of the Audi E-tron SUV back in 2011, its high sticker price and range performance, which pales significantly to such rivals as Tesla didn’t click with consumers. A fleet scan of all major car rentals didn’t result in the appearance of one E-tron.
Even though VW has had a few favorable financial quarters of late and recently boasted a plan to outdistance its competitors by launching 70 different electric models within 10 years, shareholders are still nervous about this green direction. Part of the problem can be traced to production inefficiencies at Volkswagen, which has a heavily unionized labor force that occupies half of the company supervisory board. Toyota’s labor costs are roughly half of VW, even though their auto output is roughly the same.
VW’s revenue isn’t broken down to sales sources, although recent stats suggest that on average, roughly one-third of what automakers take in are as a result of selling to car rentals. Tesla has been improving its bottom line by selling their Model S to the car rental industry, including a delivery of 17,000 vehicles to Avis offices in Norway and the Netherlands in January. Similarly, all the major car rentals in the U.S. include Teslas, except for Hertz, which has a green fleet consisting entirely of hybrids.
The uncertainty of VW’s electric vehicle plan is unfortunate, given that car rentals might jump at having an electric version of the company’s Porsche line, listed as a rollout for this fall. And going full-scale on electric vehicles might help ease the bad press Volkswagen received last year when it was caught by the U.S. Environment Protection Agency cheating on emissions records back in 2015.
But until VW straightens out its relatively costly infrastructure, car rentals may have to wait a while to see if a model is efficient enough to join their fleets. Meanwhile, folks can’t argue about the merits of renting a Tesla or Nissan Leaf.
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