High Hopes and Heavy Losses

In 2021, car rental giant Hertz made headlines with its bold move to purchase 30,000 Tesla vehicles. This decision came at a time when Tesla’s stock was soaring, and electric vehicles (EVs) were hailed as the future of transportation. Fast forward to today, and the situation has taken a dramatic turn for the worse. Hertz’s ambitious investment has turned into a financial disaster, with the company struggling to offload its high-mileage, problem-ridden Teslas.

The Costly Mistake

Hertz’s purchase was initially seen as a stroke of genius, a move that aligned the company with the burgeoning EV market. However, reality hit hard when it became apparent that these vehicles were not as cheap to maintain as originally thought. According to New York Magazine, Hertz has only managed to sell 10,000 of the 30,000 Teslas it acquired, leaving a substantial number of high-mileage cars that are proving difficult to sell. Prospective buyers are reportedly wary, and with good reason.

A Buyer’s Regret

Take the case of Bijay Pandey, who bought a 2022 Tesla Model 3 from Hertz for $25,000. What seemed like a good deal at first quickly turned into a nightmare. After purchase, Pandey discovered a significant hole in the bottom of the vehicle, which was causing damage to the battery. The repair bill? A staggering $13,000, not covered under warranty.

Reflecting on his purchase, Pandey told the magazine, “I realized why they were trying to get rid of those Teslas. If anything happens to a Tesla, then the bill is too high.”

Financial Freefall

Hertz’s troubles didn’t start with the Tesla purchase. The company had just emerged from a pandemic-induced bankruptcy, buoyed by investors and becoming a meme stock. But the hope was short-lived. Since the Tesla acquisition, Hertz has seen billions of dollars wiped from its value, and CEO Stephen Sherr has stepped down amidst the turmoil.

Tesla’s Own Troubles

Tesla, too, is facing challenges. The company reported a significant drop in sales earlier this year, driven by increasing competition, slowing demand for EVs, and disillusionment with its CEO, Elon Musk. This makes selling brand-new Teslas difficult, let alone high-mileage ones that have been heavily used as rentals.

Market Reaction

Hertz’s attempt to sell its used Teslas has not been well received. On Reddit, users were quick to advise against purchasing these vehicles. One user commented, “Yeah my advice is don’t buy a used rental car from Hertz.” Another noted, “The mileage is too high for the prices they are charging. Especially for rentals. You know everyone who rented an EV is gunning it any chance they got.”

Despite the backlash, Hertz’s new CEO, Gil West, remains optimistic. He believes the company can sell the remaining 20,000 EVs by the end of the year, as reported by New York Magazine.

EVXL’s Take

Hertz’s misadventure with Tesla serves as a cautionary tale about the complexities of the EV market. While the promise of electric vehicles includes lower maintenance costs and environmental benefits, the reality can sometimes be different. However, this should not overshadow the potential of EVs to transform transportation. As technology improves and the market matures, EVs will likely become more reliable and cost-effective. This situation highlights the importance of thorough research and cautious investment, particularly in emerging technologies. For the EV industry, it’s a learning curve that ultimately paves the way for a more sustainable future.