Keying into EVs

As more corporations commit to sustainability goals that include net-zero CO2 emission targets, one way to help bring down scope 3 emissions – which include emissions generated by business travel – is to have employees rent electric vehicles instead of traditional gas-fueled ones. EV inclusion in rental programmes might not be accelerating as rapidly as some might desire, however.

In BTN's 2024 ground transportation survey, only 35 per cent of travel manager respondents said sustainability was part of their car rental programme, down from 43 per cent in 2023. A January 2024 survey by BCD Travel also showed that 81 per cent of business traveller respondents do not rent EVs while traveling on business. Both reports were published after Hertz announced in January it was selling off 20,000 vehicles of its US-based EV fleet, which the company later increased to 30,000, or about half of its global EV supply.

And yet, 74 per cent of 2024 BTN ground transportation survey respondents said that their car rental supplier could either fully or mostly meet their company's sustainability needs compared with 63 per cent a year prior. Anecdotally, BTN has heard that some travel managers have had trouble with suppliers meeting their EV needs, while others with growing electric programmes have had no trouble getting the cars they demand.

“Overall, EV rental demand – while it can vary market to market and by customer type – is low today given broader market adoption is still in its early phases”

Two experiences

"We've not seen any availability issues because [Hertz] dropped their EV fleet size," says Siemens Corp. North America travel and sustainability manager Randall Achterberg. "We can get all the EVs that we want to get. We are very collaboratively working with them."

IBM global sourcing lead for auto lease, car rental and ground transportation David Ruzsanyi echoes that sentiment, noting there has not been any negative impact from Hertz's EV sales decision.

Hertz had been the leader in building out its EV programme, while other car rental companies have kept their strategies closer to the vest, in terms of actual numbers. There's also a bit of a chicken-versus-egg scenario. Do suppliers need to provide excess supply to draw corporate clients to EVs? Or do they need excess demand before beefing up those fleets? It likely depends on the supplier.

For Enterprise Mobility, "overall, EV rental demand – while it can vary market to market and by customer type – is low today given broader market adoption is still in its early phases," said former Enterprise SVP of global business sales Don Moore in a statement to BTN. "We do have several thousand EVs globally. And, we offer one of the most fuel-efficient fleets in the industry, with more than 100,000 hybrids and EVs. While the majority of these are hybrids, several thousand are EVs, and we are consistently adding both to our fleet."

Despite its recent sell-off, Hertz said that electric vehicles remain important to the company, especially for corporate clients.

"The corporate segment for us is really a huge part of our EV strategy," says Hertz EVP of sales and customer experience Laura Smith. "We have quite a large corporate sales team around the globe, specifically in North America, partnering with travel managers, sustainability leaders [and] procurement teams on the travel needs for corporate employees. More than anything, to provide choice."

Smith said that Hertz is seeing EVs become a standard request, and that about "90 per cent of the corporate [requests for proposals] we receive have a specific ask for a sustainable vehicle to be provided in what we price and return on." That has resulted in about 90 per cent of the company's corporate contracts including EV pricing.

As for adoption, "many of the corporate accounts we have are probably still in the single-digit percentages, but it goes up all the way and through double digits," says Smith. "We have some accounts really leading the way," she says. "They see it as a means to hit their own ESG goals."

Avis Budget Group declined to be interviewed for this report.

“EVs are in the contracts, they're available if a traveller wants them, but a lot of companies are not doing that education piece to say, 'hey, this is available'”

Choice and education

"We're seeing [EVs] included in programmes more from an optional standpoint," says KesselRun VP of program management Krissy Herman, agreeing with what Smith noted. "We're not seeing a mandate or a push."

"We're trying to give choice to the traveller within policy to make their own decisions," says IBM's Ruzsanyi. "They know the best on what kind of trips they are doing, what kind of rental distances they are driving. It's just giving them the opportunity."

Education also is key to increasing EV adoption rates, says Herman. But it also is "what a lot of programmes are missing right now to bring it full circle," she adds. "[EVs] are in the contracts, they're available if a traveller wants them, but a lot of companies are not doing that education piece to say, 'Hey, this is available. We encourage you to rent these EVs if they are available and the cost is comparable'."

Helping travellers understand what to expect and how to manage those rentals is equally important, says Herman. "If you're renting an EV and you're not familiar with them, how do you charge it? Is charging an EV reimbursable per policy? Where do you find chargers?" she asks. "Those kinds of resources are important because for non-EV drivers, there might be an intimidation factor."

For Siemens, the US travel team "promotes [the EV programme] in probably every channel that you can imagine," says Achterberg.

There's a dedicated communications channel for anybody driving an EV for personal or business use to share their experiences, he says. There is a travel guideline document, including when it's an appropriate trip for an EV rental, when it's not, and what are the key factors to consider, like refueling fees and the recharging policies that are in place for different suppliers. The travel team also has highlighted the EV programme in a broader webinar series for employees focused on the company's overall decarbonisation targets.

Another education element is an EV test-drive programme that Siemens offers its employees for them to get familiar with the vehicles. "The programme essentially is where we set up EV rentals in certain office locations. An employee will use it for a week or two, then pass the key to the next person to use it," says Achterberg.

The latter has been instrumental in increasing EV rental usage for the company. "We hit almost a 500 per cent increase from 2022 to 2023 in EV adoption, and I think over 6 per cent of our total rentals now are EVs. We expect to grow that more in 2024 as far as our overall rental transactions," says Achterberg.

The test-drive programme "is a staple part of the offering that we have, and it's really centered around building familiarity and making it as easy and as simple and as accessible as we can to both the travel managers, and then, of course, the employees," says Hertz's Smith. The company also brings EVs to corporate campuses for sustainability-focused days or weeks where it offers test drives for employees.

The feedback from those programmes has been "enormously helpful for us as we continue to hone and evolve our written and video materials," says Smith, adding that Hertz also has a hub that houses all of its education materials, including quick-start guides and landing pages specific to Tesla, Polestar and General Motors makes and models.

Though IBM does not offer Hertz's test-drive programme, it launched its EV programme in 2022 with Teslas from the rental company. Ruzsanyi first had to get buy-in from stakeholders from both an environmental perspective as well as a financial one because Tesla EVs were going to be more expensive than the regular models in the car rental programme. "We had to find that fine balance between additional investment in order to start reducing our emissions related to the current programme," he says.

The company launched a general education page on what to know, including how to turn the car on, how to drive it, and details on different types of chargers. Since then, the company switched out the Teslas and added in other options at lower price points. IBM also added Avis EVs in 2023. As more models were added to the programme, IBM simplified the guidance instead of creating a page for each brand, says Ruzsanyi.

With those model changes came higher adoption rates. For the fourth quarter of 2023, IBM's EV usage was nearly 15 per cent of the company's total car rentals, up from 5 per cent a year prior, says Ruzsanyi, adding that "a big factor in that big jump was the cheaper EV introduction. One of the key helping factors was that from the very beginning, we were looking at this as a partnership with both of our vendors."

EV challenges, landscape changes

Achterberg says that the only issue he's had in the EV programme is when a traveller goes to the lot to pick a vehicle and only an EV is available. That person may not have wanted an electric car, but that was all that was left, he says.

For Ruzsanyi, the challenge was the online booking tool. IBM doesn't yet have Concur's T2 overhaul, which means that "how these cars were visible in the booking tool, especially in the very beginning, was anything but clear. There was a very small description below the thumbnail image that said it was an electric-engine car. But if you were not reading that small description, you never knew that you were booking an electric car."

Ruzsanyi came up with some workarounds, but says he's looking forward to when his company is on Concur's new platform.

Of course, range anxiety is real. Finding convenient charging stations is probably one of the top worries for EV drivers – and, therefore, for travel programme managers too.

The United States has a goal of building 500,000 chargers by 2030. The Biden administration noted in a January 2024 communication that since the president took office, the number of publicly available charging ports has grown by more than 70 per cent, with 170,000 publicly available EV chargers across the country.

In Europe, there were more than 630,000 chargers across the continent's roads at the end of 2023, according to the European Automobile Manufacturers' Association (ACEA). The cost to charge is another hurdle for some would-be EV adopters.

Recommendations for buyers

While expanding EV infrastructure and education of travellers is helpful, so too is communication between buyers and suppliers.

"What will be important as we move forward is that corporate accounts need transparent conversations with preferred suppliers," says Herman. Buyers need to say what they want for their EV programmes and ask suppliers if they have the EV fleet to meet their demand in key markets, details of their development roadmap, and their timeline for getting more EVs in those key markets, she adds.

Achterberg says Siemens sent an RFP about 18 months ago and one "supplier lost business because they didn't have a robust enough EV strategy for us."

"If EVs are a requirement, ensure you pick the right suppliers that have an EV strategy and a roadmap," says Achterberg. "Start the sourcing process to ensure to include EVs in the programme at a negotiated contract rate."

He also agrees with Ruzsanyi's comments regarding making sure tools allow travellers to view and book EVs at the point of sale. "One thing that is helpful is being able to view the range of a vehicle when booking, otherwise it's a little difficult to plan your trip," says Achterberg.

"Start small. Try it with one or two model types, focus on a couple of key locations, and then expand from that," says Ruzsanyi. "[And EVs] should never be promoted as a solution that fits everyone. It should never be something that is mandatory, at least in our experience. Just the fact that [they're] available was already giving us a lot of positive feedback."