Hertz is making waves in the automotive world by offloading 20,000 electric vehicles, primarily comprised of Teslas, and funneling the proceeds into the purchase of gasoline-powered cars. Citing diminished demand for EVs and unexpectedly high repair costs, the company initiated the sell-off last month, set to extend throughout 2024. Notably, these EVs are hitting the market with substantial discounts.
In a filing on Thursday morning, Hertz disclosed recognizing approximately $245 million in additional net depreciation expenses related to the sales, signaling a financial setback. Nevertheless, the rental giant assured shareholders that it anticipates recovering this loss in the upcoming years.
Hertz’s decision to slash its EV fleet aligns with a broader trend of decelerating growth in electric vehicle sales. The move also follows recent remarks from Hertz’s global CEO, Stephen Scherr, addressing the challenges posed by elevated repair costs, partly attributed to the extensive use of Teslas by Uber drivers, and significant depreciation resulting from Tesla’s notable price reductions.
While just two years ago, Hertz unveiled ambitious plans to acquire 100,000 EVs from Tesla by the close of 2022, the company fell short. As of October 2023, Hertz had acquired only 35,000 Teslas, and its entire electric fleet comprised around 50,000 EVs. Despite this, Scherr maintained Hertz’s commitment to the initial goal, even acknowledging the impact of Tesla’s price cuts on the fleet’s overall value.
It’s worth noting that Hertz’s EV plans weren’t exclusive to Tesla. In 2022, the company announced intentions to procure up to 175,000 EVs from General Motors and an additional 65,000 from Polestar. The recent decision to sell a third of its EV fleet leaves lingering questions about the fate of these extensive plans, as Hertz has yet to clarify the impact on its future electric ambitions.
Hertz’s used car website lists more than 700 EVs on sale including BMW’s i3, Chevrolet’s Bolt and Tesla’s Model 3 and Model Y SUVs.
