The Move Away from Electric Vehicles

Hertz, a leading rental car company, is taking a significant turn in its vehicle strategy.

After a notable push into electric vehicles in recent years, the company is now planning to sell off about a third of its EV fleet, mostly Teslas, amounting to roughly 20,000 vehicles.

This move is a strategic decision to shift back towards gasoline-powered vehicles, driven by financial considerations, reports CNN.

Financial Challenges with EVs

The financial impact of maintaining an electric vehicle fleet has been substantial for Hertz. Despite electric vehicles costing less in maintenance, they pose higher damage-repair costs and suffer from greater depreciation.

Hertz CEO Stephen Scherr highlighted in an analyst call that repair costs for EVs can be about double those for comparable combustion engine vehicles. This has been exacerbated by the decline in the resale value of used EVs, particularly influenced by Tesla’s price cuts in the new car market.

Depreciation and Tesla’s Influence

Hertz’s electric fleet, of which Tesla vehicles constitute about 80%, has been affected by Tesla’s aggressive pricing strategies. As new car prices drop, so does the value of used cars, leading to rapid depreciation.

Hertz anticipates a loss of approximately $245 million due to this depreciation, averaging about $12,250 per vehicle.

Challenges in Repair and Maintenance

Another challenge Hertz faces with its EV fleet, especially Tesla models, is the difficulty in obtaining repairs. Tesla, being a relatively new company, lacks the established national parts supply network and trained repair technicians that other automakers possess.

This shortage results in higher repair costs and longer wait times, impacting Hertz’s business operations significantly.

Safety Concerns and Futuret Plans

Adding to the financial concerns, Scherr also noted an increased incidence of crashes involving EVs, particularly Teslas.

Hertz is actively working with Tesla to address these issues, focusing on car performance to reduce damage risks and improve parts procurement and labor processes.

Hertz’s Sales Strategy

Hertz plans to sell its used EVs through auctions and directly to customers via its Hertz Car Sales website.

This strategy allows the company to recuperate some of its losses while transitioning back to a more gasoline-powered vehicle-centric fleet.

Hertz’s decision to reduce its EV fleet in favor of gasoline cars marks a significant shift in its business strategy.

The move reflects the broader challenges faced by rental car companies in adapting to the evolving automotive market, particularly with the adoption of electric vehicles.

As Hertz navigates these challenges, its experience offers valuable insights into the complexities of integrating EVs into traditional automotive business models.