Hertz is in the midst of offloading a substantial segment of its electric vehicle (EV) fleet, which includes about 30,000 Teslas. The move follows considerable financial setbacks and difficulties associated with maintaining and depreciating these vehicles.
Background and Reasons for the Sell-Off
- Initial Purchase and Hype: In 2021, during a period of high enthusiasm for electric vehicles, Hertz announced plans to make 20% of its fleet electric, aiming to purchase 100,000 Teslas. However, the company did not reach this target and ended up with about 30,000 Teslas12.
- Financial Losses: Hertz has experienced significant financial setbacks, including a $392 million loss in the first quarter of 2024 and a $195 million charge to vehicle depreciation. These losses are attributed to the high maintenance costs and rapid depreciation of the EVs in their fleet2.
- Operational Challenges: The company’s business model, which relies on renting out cars frequently, led to higher mileage and more wear and tear on the EVs, particularly those rented to Uber drivers. This increased the maintenance costs and reduced the resale value of the vehicles1.
- Market Conditions: The broader market conditions have also played a role. Interest rates for auto loans have risen, and there is a shortage of reliable charging stations, which has dampened public interest in EVs. Additionally, concerns about battery performance in cold weather have further affected demand1.
Current Status and Future Plans
- Sales Progress: Hertz has already sold about 10,000 of its EVs and plans to sell the remaining 20,000 by the end of the year. However, the pace of sales has slowed down significantly, with reports of sales dropping from 30 a week in early 2024 to about five a week by April1.
- Strategic Shift: The company is shifting its focus back to gas-powered vehicles, as indicated by its decision to sell off a large portion of its EV fleet3.
Implications for the EV Market
Hertz’s experience with EVs may influence other rental companies’ decisions regarding the adoption of electric vehicles. The high costs and operational challenges faced by Hertz highlight the difficulties in integrating EVs into rental fleets under current market conditions2.In summary, Hertz’s decision to unload 30,000 used Teslas is driven by financial losses, high maintenance costs, and changing market dynamics. The company is now focusing on selling these vehicles to mitigate further losses and adjust its fleet strategy.
