Hertz’s supercharged Tesla deal could haul us into the electric vehicle age | John Naughton

The firm’s agreement to buy 100,000 cars from Elon Musk’s company could change people’s minds about EVs for good

On Tuesday, Hertz, the car-rental firm that recently emerged from bankruptcy, announced that it had made a deal to buy 100,000 cars from Tesla for what knowledgeable sources estimate to be worth $4bn. On learning this, my first thought was that if this is what insolvency is like, please direct me to the nearest bankruptcy court. My second thought, though, was that this could be a significant moment on the road to wider adoption of electric vehicles (EVs).

The reason is, as anyone who has rented conventional cars will know, is that the best way of having a realistic test drive of a vehicle is to rent one for a week or two on holiday. As Teslas become available via Hertz, many more people will have a chance to experience what an EV is like. This is important because, generally, only geeks and masochists (like this columnist) are early adopters of novel technology and normal cautious consumers regard EVs as rather exotic and peculiar, not something you’d rely on for commuting or the school run.

Anecdotal evidence suggests that a key factor in changing people’s minds about EVs is word of mouth: someone you know has taken the plunge and has given you a ride in theirs. This was the driving force behind the widespread adoption of the Toyota Prius hybrid in the last decade and it seems to be happening now with EVs, which may account for the fact the Tesla Model 3 was the biggest selling new car in the UK in September, despite the fact that the company spends zilch on overt marketing or advertising.

The main concern people seem to have about EVs is “range anxiety”, something that conventional car owners also experienced recently when the pumps ran dry. In that respect, Tesla’s masterstroke was to start building a network of “superchargers” almost from the moment it started making cars. These high-speed chargers are only available to Tesla owners, many of whom cite their availability as one reason for buying the car. Other concerns are that EVs are more expensive than conventional ones and difficulties with charging, especially for urban dwellers who don’t have a driveway.

Tesla owners, of whom I am one, have a few more arcane problems, chief among them the fact that everyone holds you responsible for Elon Musk, the Tesla founder who is widely perceived as a flake of Cadbury proportions on account of his tendency to tweet apparently without engaging his brain beforehand. Many of his customers also have a nauseating habit of continually referring to him as “Elon” as if he were a friend. (Apple fanboys used to have the same tendency with “Steve” Jobs, which suggests that it may be a geeky affliction.)

Another source of scepticism is the company’s share price, which, like the peace of God in the Bible, passeth all understanding. News of the Hertz deal pushed the company’s valuation over $1tn , which may be further confirmation that the stock market and the real world are parallel universes.

But perhaps the most misleading perception of Tesla is that it’s not a “proper” car manufacturer, like, say, VW or Renault. This reminds me of the widespread view in 2007, when Apple launched the iPhone, that it wasn’t a pukka phone company like, say, Nokia or Blackberry. (Anyone here remember Nokia?) This disdain is somewhat undermined by Tesla’s third-quarter results published the other day, which reveal that it managed to produce 237,823 cars (in a period allegedly plagued by supply-chain problems), had revenues of $13.74bn, net income of $1.6bn and a gross margin of 30.5%.

The iPhone comparison may well be relevant in the long run – when EVs are ubiquitous. Apple is not the dominant smartphone manufacturer, but the iPhone takes the lion’s share of the sector’s profits. Tesla’s position in the car market will probably wind up like BMW’s in the current internal-combustion market, as a maker of enjoyable and relatively expensive products with higher profit margins than those enjoyed by more mundane manufacturers.

When EV ubiquity arrives, however, the world will discover that vehicles powered by electrons are not a magic bullet for our environmental crisis. EVs may be cheaper to run than conventional cars and require less maintenance, but they’re only “greener” if they’re charged by electricity from renewable sources. There are still horrendous CO2 emissions embodied in their manufacture and the production of the huge batteries they require involves massive environmental damage, water pollution, mountains of waste and perhaps also human rights violations and dislocation of indigenous peoples.

Hertz’s monumental deal with Tesla is a notable step on that road to EV ubiquity. It will do wonders for Mr Musk’s net worth, but how much good it does for the planet remains to be seen. In the meantime, we need a plan for disposing of all those fancy VW, BMW, Jaguar and Mercedes diesels we will no longer allow. I wonder who’s working on that?

What I’ve been reading

Code breakers
One of the Most Egregious Ripoffs in the History of Science is an interesting essay by Kevin Berger in Nautilus on a new history of the race to decipher DNA, which rather takes the gloss off the conventional story.

Donald’s luck
Trump’s New Media Outlet Will Go the Way of His Steaks and Mattresses is a shrewd commentary by Jack Shafer on the Politico site about the ex-prez’s latest foray.

It won’t add up
False Positivism is a thoughtful essay by Peter Polack on reallifemag.com on the implications of using data-driven arguments to navigate ideologically fuelled disagreements.

Contributor

John Naughton

The GuardianTramp

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