Hertz is Selling 20,000 Electric Vehicles to Buy Gasoline Cars Instead
In a strategic move, Hertz, a company that had been significantly expanding its electric vehicle (EV) fleet, has decided to sell around 20,000 electric cars, constituting a third of its EV lineup.
The company plans to utilize the funds generated from the sale to acquire more gasoline-powered vehicles.
Despite the initial push into EVs, Hertz faced financial challenges associated with higher damage-repair costs and depreciation for electric vehicles.
CEO Stephen Scherr highlighted that collision and damage repairs on EVs are often about twice the costs associated with comparable combustion engine vehicles. Furthermore, the depreciation of EVs, exacerbated by a decline in new EV prices in the market, has led to lower resale values for Hertz’s used EV rental cars.
The company anticipates a depreciation-related loss of approximately $245 million, averaging around $12,250 per vehicle.
Tesla, which constitutes 80% of Hertz’s EV fleet, has played a significant role in the depreciation, aggressively reducing vehicle prices and influencing a broader market trend.
Additionally, Tesla’s relatively new status in the automotive industry results in a less mature parts supply network and aftermarket compared to traditional automakers.
Beyond financial considerations, Hertz cited challenges in obtaining replacement parts and skilled repair technicians for Tesla vehicles, leading to increased repair costs and longer repair times.
The company aims to mitigate these issues through direct engagement with Tesla to enhance car performance and minimize damage incidents.
As Hertz navigates the changing dynamics of the automotive market, the decision to divest from a portion of its EV fleet underscores the complexities and challenges faced by rental companies in balancing the evolving landscape of electric and traditional vehicles.
