Hertz's Shift: Trading 20,000 EVs for Gas Cars
In a significant pivot, Hertz, a leading player in the car rental industry, has announced plans to sell off a substantial portion of its electric vehicle (EV) fleet—approximately 20,000 cars—to reinvest in gasoline-powered vehicles. This move marks a strategic shift for the company, which had previously been expanding its electric offerings.
The decision to reduce its electric fleet stems from financial challenges linked to the maintenance and depreciation of EVs. According to Hertz CEO Stephen Scherr, the costs associated with collision and damage repairs for EVs are notably higher compared to traditional combustion engine vehicles. This, combined with the declining prices of new EVs, particularly from Tesla, has led to a significant drop in the resale value of Hertz's used EVs.
Tesla vehicles, which constitute around 80% of Hertz’s electric fleet, have been central to this issue. The car manufacturer's aggressive price cuts have set a trend in the EV market, leading to a rapid depreciation in the resale value of electric cars. This depreciation is a critical factor for rental companies like Hertz, as the sale of used vehicles forms a significant part of their business model.
Furthermore, Hertz has highlighted the challenges in repairing EVs, especially Teslas. The lack of a broad national parts supply network and fewer trained repair technicians compared to established automakers adds to the time and cost of repairs. Scherr mentioned that Hertz is actively engaging with Tesla to address these issues, focusing on reducing the incidence of damages and improving parts procurement.
Hertz's decision reflects the complexities of integrating EVs into traditional business models, especially in industries reliant on the resale value and maintenance of vehicles. This shift to gasoline vehicles, while a step back from electrification, is seen as a strategic move to align with current market dynamics and ensure business sustainability.
Hertz typically sells its used vehicles through auctions and directly to consumers via its Hertz Car Sales website.