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General Motors has agreed to sell up to 175,000 electric vehicles to Hertz Global over the next five years, the companies announced Tuesday.
The agreement requires GM to begin supplying electric vehicles such as the Chevrolet Bolt EV and Bolt EUV to the rental car giant starting in the first quarter of next year. These vehicles are expected to be followed by newer EV models on the company̵[ads1]7;s Ultium battery technology, such as the Chevrolet Blazer, Chevrolet Equinox and vehicles from GM’s other brands.
GM is expected to significantly increase production of all-electric vehicles in the coming years as North American production of cars and trucks — as well as the battery cells used to power them — increases. The company plans to reach production capacity of 1 million electric cars in North America and China each by 2025.
GM is the latest automaker to strike such a deal with Hertz after Tesla and Polestar, a Volvo-backed electric vehicle startup. Those deals covered 100,000 and 65,000 vehicles, respectively, making GM’s deal the largest of the three.
“Our work with Hertz is a major step forward for emissions reduction and EV adoption that will help create thousands of new EV customers for GM,” CEO Mary Barra said in a statement.
Hertz has prioritized increasing its fleet of electric vehicles since emerging from bankruptcy less than a year ago. The debt-laden company was an early victim of the coronavirus pandemic, but has since recovered amid rising demand on travel and supply chain issues. The problems have resulted in lower inventories, but higher profits for rental car fleets.
Shares in GM and Hertz were relatively unaffected by the announcement. Both were down by midday Tuesday amid a broader market decline.
Investors have traditionally resented automakers selling large volumes of vehicles to daily rental fleets. That’s because cars and trucks sold to rental companies are typically sold at a discount, with such deals used to reduce bloated inventory and increase their total vehicle deliveries.
However, shareholders and analysts have reacted positively to automakers such as Tesla selling electric cars to Hertz, seeing the move as a sign that battery-electric cars are becoming more mainstream.
Hertz aims to have a quarter of its fleet electric by the end of 2024, while GM has announced plans to exclusively offer electric vehicles by 2035.