It appears that after almost 4 years of sales, Tesla is finally beginning to be able to meet demand for its high-end luxury cars. Battery production is ramping up at the Gigafactory and elsewhere, the Fremont car factory is firing on all cylinders (so to speak!) and Tesla’s sales, service and Supercharger networks are all growing at scale across North America, Europe, Asia and Australia.
At this point, it would make a lot of sense for Tesla to create a car rental agency subsidiary. Here’s why:
- Tesla’s network of mall stores and service centers already provide a fleet of loaner cars to those getting repairs, service or upgrades to their vehicles. Turning this functionality into rental car locations would be a natural progression.
- Building or partnering at airports would allow Tesla to target upscale clientele who need to rent a car anyway. Maybe form a partnership subsidiary/JV with Hertz to scale quickly or have the rental agency be virtual with drivers that pick up customers curbside like flightcar.com. That drive with the “agent from the airport to the service center would be a great time to explain how the Tesla works and the advantages to ownership.
- The rental car income – let’s say $250/day, $1500/week for starters could pay for a car within a year – or maybe two if you consider overhead/infrastructure/setup costs. Renting would also be an excellent use of floor models, trade-ins and other vehicles in Tesla’s fleet that they can’t sell as new.
- Even for people with no plans to buy a car – this could provide a big incremental revenue stream for Tesla. Special occasions, weddings, road trips (for affluent people in NYC for instance) would be a significant revenue source for the company. Getaround rents for this purpose in San Francisco at $30-$60 per hour.
- Would allow prospective drivers to try out the Supercharger Network as well as home and destination charging to see how easy it actually is.
- Most importantly, it would provide a way to broaden the base of customers who may want to give a Tesla a real life test drive. I know I went from skeptic to believer during my first test drive but I think a lot of people are hesitant to make that step and a longer trial could make the difference.
- Want to recoup that $1500 you just spent on a week with a Tesla? Tesla could allow you to put that money down on a new car purchase within 30 days or as a non-refundable reservation on a Model 3? Tesla has in the past offered $1000 to both affiliate seller and buyer on word of mouth recommendations so a week in a rental car doesn’t seem like a big deal as a cost of sale.
The potential downsides to this are few. Would it dilute the brand if more people had access to these cars? Exclusivity is fleeting so I don’t think so.
Financially there are a lot of numbers to run. Insurance and damage actuarial numbers would have to be considered. Staff would have to increase. Systems would have to be built. Stores would become more crowded and complicated. Service and support staff would have to ramp up in a big way.
But last quarter numbers show that Tesla may finally be reaching supply/demand parity (at least for the Model S) and it should now consider new, non-traditional direct to consumer revenue models. Basically ‘Tesla Mobility’ should venture out into Uber/Lyft territory.
Other companies are already offering similar services using only electric vehicles and primarily Tesla’s, like ecar rent in Austria (pictured above) and EEKO in Quebec.
Why not Tesla?
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