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When Hertz announced in 2021 that it would build out its fleet of electric rental vehicles, the move was taken as a clear signal that the transition to EVs was in full swing. The company purchased 100,000 Teslas and hired Tom Brady to lead the associated advertising campaign.
But the winds have turned. Last week, Hertz said it would reverse that decision and sell a third of its EV fleet. The cost of repairing EV damage remains stubbornly high, and more broadly, the company said it has to match EV supply with lower-than-expected consumer demand.
There’s another related factor that gets less attention: customer education. Hertz’s 2021 announcement touts data showing broad consumer interest in EVs.
Indeed, survey after survey shows that a significant proportion of Americans are interested in electricity. But those same surveys show persistent consumer concern about issues like billing. Electric vehicles are a new technology and most renters still don’t know how to drive them. From the beginning, a significant part of Hertz’s challenge was not only to get customers interested in electric cars, but also to get them to handle all the ins and outs of working with the technology.
“There are millions of Americans, actually millions of consumers around the world who know and have experience with electric cars and drive them well,” CEO Stephen Sher told CNBC last week. “There are those who are experimenting and their knowledge of how to drive this car … may be part of the problem.”
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Hertz tried to address the steep educational barrier of customers. In its second-quarter earnings call last year, Scherr touted the company’s “robust digital and other educational content” and said it had deployed “EV ambassadors” to inform customers.
Yet anecdotal reports of how well these programs have been implemented are mixed. Some tenants report great experiences with eager associates who explain everything. Others, myself included, have felt left out. Last November, I rented an “interim” car from Hertz only to find when I arrived at the designated stall in the parking garage that the company had provided me with an electric vehicle. It was not what I had kept, and no man had mentioned it to me. I did receive an email from Hertz with resources regarding my EV rental, but it ended up in my inbox when I was already on my way.
Looking over the materials now, they actually seem pretty useful. Short videos explain how to drive each specific EV model the company rents, and a specially designed website allows the user to plot a trip between charging stations. If only someone at Hertz had told me about this before I got behind the wheel.
The company declined to share any data on the success or challenges of its customer education program, citing a quiet period before the company’s upcoming earnings announcement. But it is clear that the problem is in the center of attention. On an earnings call last year, Sher cited Hertz’s customer education programs as a key strategic move to position the company as a leader in electric vehicles. “What you’re seeing at Hertz is an evolution of readiness and smart investment that’s not easy to quickly copy,” he said. Next quarter, he cited new “EV functionality education tools” to help reduce the frequency and cost of vehicle damage.
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The stakes of customer education are significant. Hertz has positioned its electric vehicle movement as a gateway for consumers to experience and eventually adopt EVs, and now the withdrawal has added another headwind to that larger goal.
There is also a lesson here for any company running a consumer-facing business that is changing in response to the energy transition. Customers will need hand holding. In a sense, this is an obvious insight. Customer education is a core component of any business school marketing course. Still, it’s a topic that can often get lost amid seemingly more important concerns about pricing, cost, and other fundamental factors. And as Hertz shows, it’s a task that can be more difficult than it seems.
