How will the company make them pay off? Part of the strategy was revealed on October 27, and it involves Uber, but the Wall Street Journal also has a guess.
Concerning the bit that involves Uber, the two companies announced that Uber drivers would be able to rent Tesla Model 3 from Hertz starting November 1. The plan is to offer 50,000 Teslas for these workers by 2023, but it is unclear if they will be half of the ones Hertz already ordered or if the rental car company will buy more EVs for this program.
What Hertz revealed is that it plans to offer up to 150,000 Model 3 units to Uber drivers in the next three years if the program is successful. We have no idea how Uber or Hertz will determine if that was the case.
Curiously, Uber and Hertz provided different press releases about the same deal. Hertz did not mention how much it would charge from Uber drivers, but the tech company did that. They will start paying $334 per week, which will include insurance. The average driver makes $18.60 per hour, according to Talent.com.
That means they will have to work 18 hours just to pay the EV rent. If they work 8 hours per day, that’s a bit more than two days of work. And it is not something any Uber driver will freely choose to do. Curiously, Hertz followed Tesla’s steps with FSD and will also adopt a “Safety Score.” Only drivers with a better evaluation than 4.7 stars and at least 150 trips are eligible to rent the EVs.
Uber said the price should fall to “$299 or lower as the program gets underway.” When that happens, the average Uber driver will have to work only two days, eight hours a day, to pay the rent. None of the companies said if Uber drivers using a Tesla earn more by spending less with fuel or servicing, for example. Tesla owners have been complaining about Tesla Service Center schedules for quite a while: they do not manage to make an appointment without waiting for more than they consider reasonable.
The WSJ (Wall Street Journal) wrote an editorial to also speak about how Hertz may make more money even paying a full price for the Teslas. According to the newspaper, Hertz can count on the 30% tax credit for “qualified commercial electric vehicles.” That credit would be included in the Build Back Better Act (H.R. 5376), also known as The Reconciliation Bill.
The problem is that this bill predicts these qualified commercial electric vehicles to be eligible for this tax credit only if they were bought after December 31, 2021, and until December 31, 2031. There are also doubts if they qualify as commercial electric vehicles. If they do, that’s another way for Hertz to save money with the Tesla purchase.