These days, businesses find ways to outsource needs and services to support their business goals, lower costs, and continue to deliver on expectations. One area growing significantly is fleet leasing. While this isn’t a new service, businesses have often found ways to offset labor by contracting with a partner, where this business is changing is in the use of electric vehicles.
From commercial to consumer uses, rental EV fleets are growing in popularity, but understanding the demand, the challenges, and the advantages is important before deciding whether leasing is a better choice than fleet electrification.
Quick Links
- Rental Fleet Demands and Service Needs
- Challenges of Fleet Electrification for Rental Fleets
- Advantages of Fleet Electrification for Rental Fleets
Rental Fleet Demands and Needs
Over the last few years, the demand for fleets and, more specifically, rental fleets has grown significantly. In fact, the global rental fleet market is expected to grow at an annual rate of nearly 4%. While that’s a great number, what’s even more interesting is that there’s an even greater demand for rental fleets among private businesses.
Understanding the Rental Fleet Demand
According to Heavy Duty Trucking and VP of Operations for Ryder “Strong demand in a low-supply market is driving more private fleets toward leasing companies because of [lessors’] slot availability, leveraging their strong OEM relationships.”
But it’s more than low-supply driving the turn toward and increased demand for rental fleets. Among other factors are the stringent environmental regulations as well as maintenance, upkeep, and operating costs.
It’s worth noting that among the environmental regulations taxing the trucking industry are fuel standards. It’s just one reason commercial fleet electrification is growing in popularity. While California admissions standards are already among the highest in the country, the Environmental Protection Agency (EPA) announced the “Control of Air Pollution from New Motor Vehicles: Heavy-Duty Engine and Vehicle Standards.” The rule strengthens emissions standards to reduce air pollutants from heavy-duty vehicles and engines with a goal of reducing emissions from new trucks by 50% starting in 2027.
One way companies can get a jump on those goals, as well as their own sustainability goals, is relying on electric rental fleets which can help businesses save on the cost of fleet electrification. However, when it comes to commercial EV fleet electrification, those aren’t the only cost savings.
As any fleet manager can tell you, purchasing, maintenance, repair, and fuel costs can be unpredictable and, even if you’re down a vehicle, deliveries, service calls and more still must be completed. That can mean unpredictable costs and higher TCO, especially with combustion engines.
In fact, even a few years ago, before EV prices started dropping as tech improved, lifetime costs for EVs were lower than combustion engines. These factors mean EV rental fleets can help fleet owners and managers keep costs both lower and more predictable. Factoring in EV rental fleets can decrease capital expenses if you’re not looking to implement an electric fleet immediately. In fact rental EV fleet companies are providing essential fleet services that would, otherwise, fall on the shoulders of the fleet manager.
Similarly, car rental companies are struggling to keep up with the increasing demand for EVs. For rental companies, that means getting in on electric vehicles and rentals sooner rather than later is a smart business move. For business owners looking at light duty trucks, vans, or passenger vehicles, understanding the EV rental fleet landscape is vital as a business decides to switch to an EV fleet or look into leasing options.
Understanding Rental Fleet Services
- Fleet managers have a lot on their plates and one of the biggest challenges is meeting demand and being able to scale and hit service or delivery targets with limited resources. Responding quickly to business needs and demands takes a keen understanding of scheduling as well as resource and route management. With a rental EV fleet, fleet managers would see a shift in some of the responsibilities, freeing up their time for more business critical tasks.
More specifically, rental EV fleets might handle: - Vehicle maintenance and repair- Keeping your fleet on the road and running safely and on time comes down to ensuring there’s regular preventative maintenance as well as responding to urgent repairs.
- Charging management- One of the biggest EV fleet challenges is ensuring your vehicles are charged and ready to go when needed. Observing and learning from a rental EV fleet manager can help your team better understand this process. Further, rental EV fleet managers and drivers will already have “insider” knowledge on the public EV infrastructure they might need to keep them on the road.
- Vehicle tracking- In most cases, this will likely be a shared responsibility, but GPS tracking and telematics provide vital information regarding vehicle location, speed, performance, and maintenance needs. With this data, both EV rental fleet managers and businesses can assess the route management, charging and driving schedules, resource needs and more.
- Driver training and safety- As noted above, maximizing power and resource management in an EV is a bit different than a traditional vehicle. Regenerative braking and understanding how to change driving habits for that benefit takes training. Normally, the full burden of training falls upon a business, but, when renting fleet vehicles, there will likely be support from the rental EV fleet owner.
- Insurance- No doubt you’ll still need and want an umbrella insurance policy to cover drivers working for you, but the rental EV fleet owner will also have insurance on the vehicles.
- Compliance and regulations- As mentioned above, emissions regulations are growing more stringent. However, there are other requirements including safety standards and legal compliances for which a rental fleet owner may be responsible. At the very least, they can help renters provide this information to the necessary organizations or stakeholders.
Rental EV Fleet Needs
Let’s be honest. Amazon changed the delivery game. Even for their warehouse house deliveries, there’s an increasing demand for on the fly, on demand, last mile deliveries and that’s not the easiest service to provide when it comes to logistics or keeping costs low. Fleet management requires a lot and the demand for last mile delivery compounds those demands.
More specifically, delivery speed hinges upon last mile delivery. Many retailers, both big and small, do not have the warehouse and delivery infrastructure of Amazon and that means cobbling together services to meet customer demands. Rental fleets can fill in the gap here. With no need for a local depot, businesses can contract out rental fleets to keep their delivery promises.
And, when it comes to last mile deliveries, electric fleets are, so far, most beneficial. First, one of the biggest demands is turnover and the ability to be responsive. That means getting vehicles out of the depot when you need to, which can also be unpredictable. Rental fleets can allow you to scale as needed without making unnecessary investments.
Similarly, the stop and go wear and tear on vehicles completing these services can be significant, and in turn raise maintenance costs for fleet managers. However, EVs are, quite literally, designed for this kind of travel. They use no energy during idle and can actually generate additional power through regenerative braking. Without all the mechanics, you see less wear and tear and you leverage the technology behind electric vehicles.
Challenges of Fleet Electrification for Rental Fleets
One of the biggest challenges facing any EV fleet, rental or not, is EV charging. Public EV charging infrastructure is not ubiquitous enough to easily support charging on the fly, at least not without significant route management efforts. As a result, EV rental fleets may be, for the time being, limited to shorter, local routes.
Of course, public EV charging isn’t the only option, though with the growth of EV charging hubs it promises to improve. Talking with an EVSE provider about installing EV charging stations on your site is always a way to improve and increase charging opportunities for your electric fleet.
For rental companies, there’s the upfront cost of electric vehicles and the infrastructure to support them at a rental location or depot. While over the long term there are considerable savings, lower TCO, and revenue opportunities, the initial costs to set up this kind of program can be a challenge.
And, the challenges aren’t just for fleet operators and owners. Learning to drive, manage, and maintain EVs is not quite the same as combustion engines. There’s some driver education that needs to take place and, as the drivers may not be under the supervision of the fleet owner, this can create issues.
Similarly, while EVs need less maintenance it doesn’t mean they’re maintenance free and so, much like driving, there’s a learning curve around understanding how the maintenance needs are different. Rental EV fleet owners may then need to either train existing maintenance staff or work with a third party provider for this purpose.
And, while we’ve focused largely on the last mile delivery opportunities for rental EV fleets, rental companies may also wish to invest in passenger EVs for additional rental opportunities. However, challenges here, beyond those listed, include drivers with range anxiety as well as those that are unfamiliar with EVs. However, even this presents a unique rental opportunity which will be discussed below.
Despite these challenges, rental EV fleets also come with a lot of potential for businesses, drivers, and rental fleet owners.
Advantages of EV Rental Fleets
Yes, there are challenges, but this is among the most significant changes that can benefit every segment of a business from B2B and B2C customer bases to the business owner themselves.
For B2B customers, relying on EV rental fleets can help improve services, especially when it comes to deliveries or service outside their normal geographical range. This is, as mentioned, especially helpful for last mile delivery services. Businesses can save on the cost of fleet ownership and maintenance, while leveraging electric vehicles to meet regulatory and corporate sustainability goals.
Additionally, rental EV fleets can also be a valuable stepping stone to fleet electrification if that’s the ultimate plan. Rental EV fleets and their ownership can help provide initial assistance with logistics and the experience will help train drivers on leveraging the advantages of electric vehicles. Fleet electrification is a process and relying on a rental EV fleet in the early stages can help demonstrate the value while enabling a slow roll out that doesn’t overextend any budgets.
For B2C customers, or rental car customers, EVs are a great option for the eco-conscious, current EV owners who prefer them, or even for drivers who are curious about EV ownership and want to try them out before buying. Hertz, for example, reports that 10% of its fleet is electric, which demonstrates the popularity of this option among consumers.
For rental fleet owners, the business potential is significant as are the cost savings. Essentially you’re creating revenue streams while decreasing overall costs, even with the initial investment into the vehicles and EV charging stations. You’re also contributing to overall sustainability goals while boosting your reputation among customers who are prioritizing working with environmentally aware and proactive businesses.
Given the demands, shortages, and advantages, expect to see an increase in rental EV fleets and rental electric vehicles across multiple segments. From those doing last mile delivery to businesses offering localized services, electric vehicles shift the burden of ownership to a fleet manager or owner while that business is able to turn the demand into dollars.
If you’re ready to look at electrifying your rental fleet, or your standard fleet, or providing charging opportunities for those drivers in need, get in touch with the NovaCHARGE team today. 