General Motors has agreed to sell up to 175,000 electric vehicles to Hertz Global over the next five years, the companies announced Tuesday.
The deal calls for GM to start supplying electric vehicles such as the Chevrolet Bolt EV and Bolt EUV to the rental car giant starting 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.
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 1 million EVs in North America and China, each, by 2025.
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,” CEO Mary Barra said in a statement.
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.
Shares of GM and Hertz were relatively unimpacted by the announcement. Both were down midday Tuesday amid a broader market decline.
Investors have traditionally frowned upon automakers when they sell large amounts of vehicles to daily rental fleets. That’s 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 exclusively offer electric vehicles by 2035.