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After $4 billion deal with Tesla, Hertz says it will rent out half those cars to Uber drivers

Drivers with at least a 4.7-star rating will be able to rent a Model 3 for $334 a week before taxes and fee.
Vehicles at a Tesla location in Littleton, Colo.
Starting early next month, Hertz customers will be able to rent Tesla Model 3 sedans at locations in Los Angeles, San Francisco, San Diego and Washington, D.C.David Zalubowski / AP file

Days after it announced it will "initially" add 100,000 Teslas to its U.S. and European fleet, the car rental company Hertz said Wednesday that it will make up to half of the battery-electric vehicles available to Uber drivers in an expanded rental program.

Separately, Hertz signed a deal to provide the used car retailer Carvana with vehicles coming out of its rental fleet. Companies like Carvana are struggling to find inventory in the face of a severe shortage of both new and previously owned vehicles.

"Today's partnership with Uber is another major step forward in Hertz becoming an essential component of the modern mobility ecosystem and executing on our commitment to being an environmentally forward company," said Mark Fields, Hertz's interim CEO.

The long-struggling rental firm said Monday that it would acquire at least 100,000 Teslas — while also looking at the possibility of adding battery-electric vehicles from other manufacturers. The move, Hertz said, would create "one of the largest [rental EV fleets] in the world."

Starting early next month, customers will be able to rent Tesla Model 3 sedans at Hertz locations in Los Angeles, San Francisco, San Diego and Washington, D.C., with plans to expand nationwide by the end of the year. Motorists will be able to charge up at Hertz locations and at Tesla's network of Supercharger stations.

A handful of Uber drivers already use electric vehicles, which the longer range offered by Tesla's products makes possible without having to charge up as frequently as earlier battery-electric vehicles. The deal with Hertz also should address another key obstacle: cost.

"It's important to note that owning an electric vehicle is still too often more expensive than a traditional gas-powered vehicle," Andrew Macdonald, Uber's senior vice president of mobility and business operations, said in a statement. "This partnership is a step forward to advance electrification on the Uber platform."

Drivers initially will be able to rent Model 3s for $334 a week before taxes and fees. Hertz plans to eventually lower that to $299. Uber drivers will need to have minimum 4.7-star ratings and must have logged at least 150 trips for the ride-sharing service.

The tie-ups with Hertz and now Uber represent the biggest deal ever for Tesla, whose valuation hit $1 trillion Monday. Tesla is getting ready to double its production capacity with the coming openings of factories in Texas and Germany. It already operates assembly plants in California and China.

For Hertz, the deal is aimed at positioning the company as a technological and environmental leader in a restructuring after it completed a 13-month run through bankruptcy in June.

During that time, it dumped a large share of its daily rental fleet. Hertz is rebuilding the network but plans to use Carvana as a more effective way to sell off used models going forward. It previously used a variety of methods to get rid of vehicles, including car auctions and its own Hertz Car Sales network. It is the first time a daily rental company has directly partnered with a retail chain specifically focused on used vehicles.

"Our new partnership with Carvana will help Hertz provide a tech-enabled and scalable channel through the lifecycle of our fleet," Fields said Wednesday.