ADVFN News |  General Motors will sell up to 175,000 electric vehicles to Hertz by 2027.

ADVFN News | General Motors will sell up to 175,000 electric vehicles to Hertz by 2027.

THE General Motors (NYSE:GM) has agreed to sell up to 175,000 electric vehicles to Hertz Global (NASDAQ:HTZ) over the next five years, the companies announced Tuesday.

General Motors Company is also traded at B3 via ticker (BOV:GMCO34).

The deal requires GM to begin supplying electric vehicles such as the Chevrolet Bolt EV and Bolt EUV to the car rental giant starting in the first quarter of next year. These vehicles are expected to be followed by new EV models with the company’s Ultium battery technology, such as the Chevrolet Blazer, Chevrolet Equinox and vehicles from other GM brands.

GM is expected to significantly increase its production of 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 1 million EV production capacity in North America and China each by 2025.

GM is the latest automaker to strike such a deal with Hertz after Tesla and Polestar, the Volvo-backed electric car startup. The deals were for 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 in reducing emissions and EV adoption that will help create thousands of new EV customers for GM,” CEO Mary Barra said in a statement.

Hertz has made increasing its electric car fleet a priority after emerging from bankruptcy less than a year ago. The debt-ridden company was an early victim of the coronavirus pandemic but has since bounced back amid increased demand for transport and distribution issues. The problems resulted in low inventory but high profits for the car rental fleet.

The companies declined to disclose financial details of the deal. Steve Carlisle, GM’s president of North America, said the company plans to sell electric cars closer to the “retail side” in exchange for a discount on fleet sales.

“It’s a good deal,” Carlisle told reporters during the call.

Shares in GM and Hertz were unaffected by the announcement. Both fell at midday on Tuesday amid broad market declines.

Investors have traditionally resented automakers selling large numbers of vehicles to day-rental fleets. That’s because cars and trucks sold to rental companies are often sold at a discount, and these discounts are used to reduce inventory and increase the total number of vehicles shipped.

However, shareholders and analysts have responded positively to automakers like Tesla selling electric cars to Hertz, seeing the move as a sign that battery electric cars are becoming more popular.

Hertz aims to have a quarter of its fleet electric by the end of 2024, while GM has announced plans to offer only electric vehicles by 2035.

With news from CNBC