Hertz (NASDAQ:HTZ), the rental car company that represented one of the most devastated organizations following the coronavirus pandemic, is firing back on all cylinders as it makes its pivot to electric vehicles (EVs). On Tuesday, Hertz announced it will partner with hydrocarbon energy specialist BP (NYSE:BP) to help build out charging infrastructure. HTZ stock initially gained about 6% on the news, though it pared down to about 2% up in the afternoon.
Per Hertz’s press release, the rental car firm and BP signed a “memorandum of understanding (MOU) for the development of a national network of EV charging stations.” Under the terms of the agreement, BP Pulse – which is the oil company’s EV-charging business unit – will install the chargers. As well, it will provide software and services to help Hertz manage its expanding fleet of EVs, per CNBC.
The software, called Omega, will “ensure Hertz’s growing fleet of electric rental cars are recharged quickly and efficiently between rentals,” per the press release. Hertz CEO Stephen Scherr added:
“Hertz is accelerating the adoption of electrification by investing in the largest rental fleet of electric vehicles in North America and expanding the availability of charging stations. We are excited to partner with bp pulse to create a national charging infrastructure for the Hertz EV fleet, thereby growing the number of charging options available to our customers and providing them with a premium electric experience and lower emission travel options.”
HTZ Stock Attempts a Comeback Amid Trying Times
For market observers, Tuesday’s lift in HTZ stock represents strong fundamental efforts to right the ship. Near the onset of the Covid-19 crisis, Hertz shocked the world when it fell into bankruptcy. Having emerged from the proceedings, the new ownership and board are now firmly pivoting to the electrification of mobility.
Indeed, it’s hardly the first time Hertz made waves regarding the electric transition. Several days ago, InvestorPlace writer William White reported the rental car firm intends to acquire 175,000 EVs from General Motors (NYSE:GM) over the next five years.
“This will have the car rental company adding Chevrolet Bolt EV and Bolt EUV units to its fleets as early as next year. Other EVs from the company will start showing up in the following years,” noted White. As well, Hertz signed “similar agreements with both Tesla (NASDAQ:TSLA) and Polestar (NASDAQ:PSNY) as it seeks to switch its fleet over from gas vehicles to EVs.”
Still, the pivot will almost certainly face challenges. According to a Kelley Blue Book report earlier this year, the average price for a new EV stood at $62,876. In contrast, an entry-level luxury car cost on average $49,593. Moreover, a compact car cost $25,977.
Assuming Hertz charges rental fees based on similar pricing gaps, demand for EV rentals could face sustainability issues. Nevertheless, the company improved substantially from its prior woes, which ultimately may be encouraging for HTZ stock.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.