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Due to high maintenance costs and unexpected problems, several rental companies are rethinking the use of electric cars in their fleets. What once seemed to be the trend of the future is now facing challenges that are leading companies to opt for more traditional vehicles with lower operating costs.
Electric cars, touted by many as the vehicles of the future, are facing a challenging time in the car rental market. The promises of sustainability and long-term savings are being overshadowed by high maintenance costs and the rapid depreciation of models, factors that have led rental companies to rethink the adoption of electric cars in their fleets. The trend, which seemed promising, is now in decline, with many rental companies abandoning electric cars due to unexpected challenges.
The electric car crisis: why rental companies are abandoning this technology
In recent years, the introduction of electric cars into the Brazilian market has generated a wave of optimism, especially among car rental companies, which traditionally account for half of automakers' car sales.
However, the electric car crisis is becoming a reality that is difficult to ignore. With a fleet of more than 4,3 electric vehicles and 6,8 hybrids, rental companies are facing a series of challenges with this new technology.
- Toyota Corolla Cross 2.0 FLEX 2022 stands out for its durability and economy, with a 2.0 naturally aspirated engine with 177 hp and average consumption reaching 13,5 km/l on gasoline
- Toyota Corolla Altis Hybrid 2020: The sedan that does up to 19,5 km/l in the city and offers 7 airbags for R$125 thousand!
- In the R$20 range, Chevrolet delights demanding drivers with a popular, reliable and inexpensive car to maintain
- New RAM Dakota pickup truck arrives to shake up the pickup market: direct rival to Hilux and Ranger promises impressive performance and economical consumption of up to 13 km/l!
Paulo Miguel Junior, vice president of Brazilian Association of Car Rental Companies (Abla), revealed that electric cars represent less than 1% of the total fleet of rental companies in Brazil. Localiza, one of the largest companies in the sector, ended 2023 with only 2,7 thousand electric and hybrid vehicles in a fleet of 631 thousand cars.
The problem is not only the low adoption, but also the rapid depreciation of these vehicles. The first electric cars purchased about three years ago were resold with depreciation of up to 45%, a blow to companies that invested heavily in this technology.
Electric cars are stuck at rental companies: the issue of depreciation and lack of demand
The decline in the value of electric cars has been exacerbated by the entry of Chinese brands into the market, with more competitive offerings and superior technology. This has forced traditional automakers to reduce their prices in order to maintain their competitiveness, leaving rental companies that acquired electric vehicles at the beginning of the trend with a hefty bill to pay.
One of the most emblematic examples is that of Movida, one of the pioneers in the purchase of electric cars. As of 2021, the company has acquired around 600 models of electric cars, such as Nissan Leaf, Renault Zoe, Fiat 500e and BMW i3. However, in less than two years, most of these vehicles were parked in yards due to lack of demand. Some were stranded for up to six months and, in the end, were sold at prices up to 40% below the Fipe table.
The situation is not much different outside Brazil. American giant Hertz, for example, also gave up on a large batch of Tesla electric cars due to the accelerated depreciation of used cars. The scenario reflects a growing frustration with electric cars, both by rental companies and consumers.
The rise and challenges of electric cars in the used car market
Despite the depreciation, the used electric and hybrid car market still shows some growth. Enilson Sales, president of Fenauto, reported that sales of electrified vehicles (electric and hybrid) grew 90% between January and July 2023, totaling 33 thousand units. However, he emphasizes that this segment is still a niche market, representing a very small share of total sales.
Sales notes that the comparison between electric and combustion vehicles may be “unfair,” as electric vehicles are only just beginning to gain traction in the market. The reality is that while the future of electric cars looks promising in terms of sustainability and innovation, the present is still fraught with challenges that directly affect the vehicle rental sector.
Depreciation and high maintenance costs drive rental companies away from electric cars
One of the main factors that have led rental companies to abandon electric cars is the combination of accelerated depreciation and high maintenance costs.
São Paulo businessman Maurício de Barros, who purchased a Peugeot e-208 for R$249, reported a bitter experience when trying to sell the vehicle after driving 54 thousand km in two and a half years. He received no offers and ended up selling the car for just R$100 at a dealership, a loss of more than 50% of the original value. “It was a blow,” Barros lamented.
This type of scenario has been common for many who have invested in electric cars as a long-term solution.
Although technology is on the rise, there is still a lack of adequate infrastructure and technical support, which contributes to high maintenance costs and a lack of demand in the used car market. Many rental companies are choosing to suspend the purchase of new models, preferring to wait for a more favorable time.
Uncertain future for electric cars in the rental market
Although rental companies are abandoning electric cars due to the current problems, the future of this technology still remains promising. Brands such as BYD and GWM, which brought electric and hybrid models imported from China, are promising to start local production in the coming years, which could improve competitiveness and reduce maintenance and parts replacement costs.
These automakers are also adopting strategies to buy back used cars, offering prices close to those in the Fipe table, in an attempt to alleviate losses due to depreciation. However, it remains to be seen whether these actions will be enough to convince rental companies to resume investing in electric cars.
Rental companies and the difficult relationship with electric cars
The electric car market is facing a delicate transition period, and car rental companies, which initially invested in this technology, are now abandoning electric cars due to high depreciation and unexpected costs.
While sustainability and innovation remain key words for the future of transportation, the rental sector has yet to find a viable model for incorporating electric cars into its fleets profitably.
Over time, the market may adjust, with improvements in infrastructure and a drop in the production and maintenance costs of electric cars. For now, however, rental companies are cautious and prefer to wait for the market to stabilize before investing again in the vehicles of the future.
I would like to know and learn what is meant by “high maintenance cost”.
Totally biased message. The polluting oil industry fears the advance of cleaner and cheaper energy. The planet is crying out for help and the population is paying attention to new technologies.
They want to resell their used cars as if they were new, but that's not possible, and the Brazilian market can't handle any more of these junk cars that they sell here for absurd prices.
High maintenance cost? LOL this desperate joke was good. Everyone knows that the maintenance cost of an electric car is infinitely lower than the maintenance cost of a combustion car. I'll never get out of my electric car again.
I have a fully electric car and I am completely satisfied with the economy and comfort it provides, in addition to the full insurance and very affordable IPVA.