Author: Bruno Mouly
3-minute read
Short-term rental companies face the challenge of transitioning to electric
Under pressure to green their fleets, short-term car rental companies are encouraging customers to opt for electric vehicle rentals, which allows them to maximize profitability through high utilization rates.
However, this requires convincing as many customers as possible to make the switch to electric.
To gradually introduce electric vehicles into their fleets, short-term car rental companies with more than 100 vehicles must balance regulatory pressure to adopt greener fleets with the need to ensure the profitability of electric vehicles.
« The challenge for car rental companies is to persuade as many of their customers—who are used to internal combustion engine vehicles—to rent electric vehicles. Since electric vehicles are much more expensive to purchase, the key is to maximize their utilization rates and secure the most favorable buyback contracts with manufacturers for their residual values after 6, 9, or 24 months of use »
Pierre Anjuère
Director of a rental company partnering with the Res@Car network
Attractive total cost of ownership (TCO) for electric vehicles over longer usage periods
This is a difficult challenge, especially given that customer demand for electric vehicles remains low, the total cost of ownership (TCO) for these clean vehicles is generally higher than for internal combustion engine vehicles, their usage rate is 20% to 25% lower, and additional investment in charging stations is required.
Solutions are emerging, however: « To better manage usage costs, we have chosen to purchase electric vehicles with systematic ‘buy-back’ contracts. To facilitate charging at our agencies or on the go, we have partnered with an electric charging operator. We estimate that the TCO of our electric vehicles, including maintenance costs, approaches that of our internal combustion engine vehicles after 18 months of operation », explains Pierre Anjuère.
80% self-charging hybrids, 20% electric and internal combustion engine vehicles
This Res@Car network partner, which has a network of local franchises across France with fleets not exceeding 60 vehicles, is only subject to the LOM (French Mobility Orientation Law) in its three branches, each averaging around 400 vehicles.
This does not prevent some franchises in major provincial cities from integrating up to 20% to 30% electric vehicles into their fleets to meet the demand of urban customers, who show a greater preference for this type of vehicle compared to rural or suburban areas.
« Most of our franchised agencies’ fleets consist of internal combustion engine vehicles. It is up to each agency manager to develop their own strategy for transitioning to electric » emphasizes Pierre Anjuère.
In contrast, this Res@Car partner offers approximately 80% self-charging hybrid (or full hybrid) vehicles and 20% electric and internal combustion engine vehicles in its three branches.
« Plug-in hybrids do not appeal to customers who primarily drive in thermal mode and occasionally use electric until the battery is drained. Full hybrids, which do not require charging stations, are more relevant for them and for us » he notes.
However, car rental companies with more than 100 vehicles cannot rely solely on full hybrids, as they are classified as internal combustion engine vehicles under regulations; they must adapt.
How to convince more customers to rent electric vehicles?
To comply with the French Mobility Orientation Law (LOM), which mandates an increasing annual quota of low-emission vehicles in fleets—with heavy financial penalties for non-compliance—rental companies are forced to massively introduce electric vehicles into their fleets.
« Our challenge is to change customers’ perceptions of electric vehicles. Short-term rentals provide an excellent opportunity for manufacturers to allow customers accustomed to internal combustion engines to test and familiarize themselves with electric models. Ultimately, the decision lies with the customer », estimates Pierre Anjuère.
To boost electric vehicle rentals, rental companies can benefit from the energy savings certificate (CEE) purchase assistance mechanism: up to €400 per passenger vehicle and €2,500 per light commercial vehicle, provided they are kept for 24 months.
Adjusting the proportion of electric vehicles based on demand
For now, car rental companies must primarily adjust the proportion of electric vehicles in their fleets according to customer demand and continue to persuade as many customers as possible to switch to electric.
This is especially important given the current economic climate. The short-term car rental of electric cars has declined significantly, reflecting a 7% drop in new electric vehicle sales to individuals compared to the first half of 2024.