Are Corporate Travelers Keying into EVs?
There are roadblocks along the way.
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, however, in rental programs might not be accelerating as rapidly as some might desire.
In BTN's 2024 ground transportation survey, only 35 percent of travel manager respondents said sustainability was part of their car rental program, down from 43 percent in 2023. A January 2024 survey by BCD Travel also showed that 81 percent of business traveler respondents do not rent EVs while traveling on business. Both reports published after Hertz announced in January it was selling off 20,000 vehicles of its U.S. EV fleet, which the company later increased to 30,000, or about half of its global EV supply.
And yet, 74 percent 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 percent 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 programs have had no trouble getting the cars they demand.
Two Experiences
"We've not seen any availability issues because [Hertz] dropped their EV fleet size," Siemens Corp. North America travel and sustainability manager Randall Achterberg said. "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 echoed 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 program, 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 suppler.
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," Enterprise SVP of global business sales Don Moore said 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."
“Many of the corporate accounts we have are probably still in the single-digit percentages [for EV adoption], but it goes up all the way and through double digits."
Despite its recent selloff, 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," Hertz EVP of sales and customer experience Laura Smith said. "We have quite a large corporate sales team around the globe, specifically here 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 percent 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 percent 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," Smith said. "We have some accounts really leading the way," she said. "They see it as a means to hit their own ESG goals."
Avis Budget Group declined to be interviewed for this report.
Choice and Education
"We're seeing [EVs] included in programs more from an optional standpoint," KesselRun VP of program management Krissy Herman said, agreeing with what Smith noted. "We're not seeing a mandate or a push."
"We're trying to give choice to the traveler within policy to make their own decisions," IBM's Ruzsanyi said. "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, Herman said. But it also is "what a lot of programs are missing right now to bring it full circle," she added. "[EVs] are in the contracts, they're available if a traveler 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.' "
“[One] supplier lost business because they didn't have a robust enough EV strategy for us.”
Helping travelers understand what to expect and how to manage those rentals is equally important, Herman said. "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 said. "Those kinds of resources are important because for non-EV drivers, there might be an intimidation factor."
For Siemens, the U.S. travel team "promotes [the EV program] in probably every channel that you can imagine," Achterberg said.
There's a dedicated communications channel for anybody driving an EV for personal or business use to share their experiences, he said. 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 program in a broader webinar series for employees focused on the company's overall decarbonization targets, he said.
Another education element is an EV test-drive program that Siemens offers its employees for them to get familiar with the vehicles. "The program 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," Achterberg said.
The latter has been instrumental in increasing EV rental usage for the company. "We hit almost a 500 percent increase from 2022 to 2023 in EV adoption, and I think over 6 percent of our total rentals now are EVs. We expect to grow that more in 2024 as far as our overall rental transactions," Achterberg said.
The test-drive program "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," Hertz's Smith said. 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 programs has been "enormously helpful for us as we continue to hone and evolve our written and video materials," Smith said, 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 program, it launched its EV program 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 program. "We had to find that fine balance between additional investment in order to start reducing our emissions related to the current program," he said.
"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."
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 program, IBM simplified the guidance instead of creating a page for each brand, Ruzsanyi said.
With those model changes came higher adoption rates. For the fourth quarter of 2023, IBM's EV usage was nearly 15 percent of the company's total car rentals, up from 5 percent a year prior, Ruzsanyi said, 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 said that the only issue he's had in the EV program is when a traveler 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 said.
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 he said 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, travel program managers.
President Joe Biden's 2021 infrastructure bill directed $7.5 billion toward EV chargers to help meet his goal of building 500,000 chargers in the United States 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 precent, with 170,000 publicly available EV chargers across the country.
As of January 2024, there were at least 40 U.S. based EV charger factories announced or opened. "These facilities now have the capacity to produce more than a million chargers each year—including 60,000 fast chargers," according to the administration.
Where these chargers are located matters. Pew Research using U.S. Energy Department charger location data as of Feb. 27, 2024, identified that California had the most public charging stations, at 15,710. The next nearest state was New York, with 3,796, followed by Florida (3,228) and Texas (3,157). The state with the least number of public charging stations was Alaska, with 62, followed by South Dakota (91), North Dakota (95) and Wyoming (95).
The cost to charge is another factor. For the first quarter of 2024, Montana had the highest cost, at $0.56 per kilowatt hour, according to Stable Auto, which uses more than 70 variables to predict return on demand for EV charging stations. Nebraska was the cheapest, at $0.21 per kWh. Most states averaged between $0.41 and $0.50 per kWh. The average prices increased 3.1 percent from January to March, according to the company.
All this is key to supplier EV strategies as well, and how quickly they can move to deliver a product that meets client expectations, Enterprise’s Moore told BTN via email. “[We’re] focused on identifying our current power access of our locations and modeling power needs for varying levels of EV penetration," Moore said. "We want customers to have a great experience with EVs, and access to power and charging is a critical part of the EV experience. Availability, operability and reliability, convenience and safety are critical for broader adoption of electrified mobility."
Recommendations for Buyers
While expanding EV infrastructure and education of travelers 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," Herman said. Buyers need to say what they want for their EV programs 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 added.
"What will be important as we move forward is that corporate accounts need transparent conversations with preferred suppliers."
Achterberg said 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," he said.
"If EVs are a requirement, ensure you pick the right suppliers that have an EV strategy and a roadmap," Achterberg said. "Start the sourcing process to ensure to include EVs in the program at a negotiated contract rate."
He also agreed with Ruzsanyi's comments regarding making sure tools allow travelers 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," Achterberg said.
"Start small. Try it with one or two model types, focus on a couple of key locations, and then expand from that," Ruzsanyi said. "[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."
Built with Shorthand