Uber is acquiring 50,000 Tesla vehicles to rent to its drivers as part of an ambitious plan to electrify its fleet in the US by 2030. The ride-hailing company is working with rental car company Hertz, which announced yesterday that it had ordered 100,000 Teslas.
The move comes as car companies and transportation providers around the world are coming under regulatory pressure to phase out gas-powered vehicles in favor of those that produce zero emissions. California, the largest auto market in the US, set in place rules for ride-hailing companies like Uber and Lyft, requiring that 90 percent of their fleets be electric by 2030.
Uber has long offered discounts on car rentals to drivers who don’t own their own vehicle, with Uber and Hertz working together on such a program since 2016. But they have never collaborated to rent out one specific vehicle to drivers until now.
Starting November 1st, Uber drivers who live in Los Angeles, San Francisco, San Diego, and Washington, DC can rent a Tesla Model 3 through Hertz at a rate of $334 a week, including maintenance and insurance. The weekly rate will fall to $299 or lower as the program gets underway, Uber says. And the program will expand nationwide in the weeks to come — with the goal of having all 50,000 Teslas on Uber’s platform by 2023.
It may be difficult to attract drivers to the program with a weekly rate of $334, but Uber is confident that drivers will see the benefit in fuel savings and less maintenance. Also, drivers who use hybrid or electric vehicles to pick up passengers receive an extra 50 cents per ride, while drivers using specifically battery-electric vehicles get another dollar on top of that — for a total of $1.50 extra per ride. The average weekly cost for a Hertz rental car ranges from about $150 up to about $325, according to Autos.com.
Initially, drivers must have at least a 4.7-star rating and have completed at least 150 trips to be eligible to rent a Tesla. For recharging, drivers will have access to Tesla’s Supercharger network, as well as discounts at participating EVgo charging stations.
Last year, Uber made the ambitious pledge to go “100 percent electric” by 2030 in the US, Canada, and Europe and by 2040 for the rest of the world. The company also said it would spend $800 million to help “hundreds of thousands of drivers in the US, Canada, and Europe transition to battery EVs by 2025” — though a spokesperson wouldn’t disclose the financial aspects of the company’s deal with Hertz.
Uber’s track record with car rentals and leases isn’t exactly spotless. The company shuttered a subprime auto lending program after drivers complained about racking up debt to pay exorbitant rates. Uber notes that this new program is designed to appeal to drivers who rent specifically, not get drivers to switch from owning to renting.
Ride-hailing was originally pitched to the public as a more environmentally friendly way to get around compared to private car ownership. But it turns out the opposite was true. Numerous studies have shown that the average ride-hailing trip creates about 50 percent more pollution than the average traditional car trip. Even worse, over half of all ride-hailing trips in major cities are made by people who would have otherwise used cleaner means of transit to get to their destination.
Today, however, fewer than 1 percent of ride-hailing vehicles in the US are electric, according to Bloomberg. The auto industry is in the midst of a massive transition to electric vehicles, even though EVs still only compromise less than 5 percent of annual sales.
Uber isn’t the first company to use Teslas as a ride-hailing vehicle. Earlier this year, moped rental company Revel announced its own Uber-esque ride-hailing service in New York City with 50 bright blue Tesla Model Y vehicles.