Published - September 21, 2022 @ 2:08 PM (EET)

‍

Alongside General Motors (NYSE:GM) Tuesday, Hertz Global Holdings Inc. (NASDAQ:HTZ) announced a groundbreaking deal that would see the rental company buy up to 175,000 electric vehicles from GM over five years.

The companies said that Hertz would buy EVs from across GM's four main brands in North America, which includes Chevrolet, Buick, GMC, and Cadillac, with the first orders being the Chevy Bolt EVs starting early next year.

Those vehicles are expected to be followed by newer EV models on the company's so-called Ultium battery technology, such as the Chevrolet Blazer and Equinox.

Hertz Chief Executive Officer Stephen Scherr said in the statement Tuesday the agreement "will dramatically expand our EV offering to Hertz customers, including leisure and business travelers, rideshare drivers and corporates."

To differentiate fleets and add to their premium offerings, car-rental companies have been ordering electric vehicles from auto markers, and - in turn, demand for EVs from car-rental companies allows for the opportunity to land bulk orders.

WHY IT MATTERS

With tens of thousands of EVs available for rent at 500 Hertz locations across 38 states, the rental company is investing to create the largest rental fleet of EVs in North America.

The latest deal builds on orders Hertz already has in place for other EV models, including an additional 100,000 Teslas (NASDAQ:TSLA) for its fleet and 65,000 electric cars from Swedish automaker Polestar.

Meanwhile, Chief Executive Mary Barra of General Motors said early this year the company expects to sell 400,000 EVs by the end of 2023, more than ten times the number it has sold annually in recent years.

"Our work with Hertz is a huge step forward for emissions reduction and EV doption that will help create thousands of new EV customers for GM," Barra said.

Following the announcement from Ford (NYSE:F) that its supply chain costs were about $1 billion more than anticipated, GM shares traded lower by 5.34% at $39.18%.