CEO Stephen Scherr, during the JPMorgan Auto Conference last year, highlighted challenges arising from increased costs for EVs, particularly Teslas. In response to front-end collisions by certain users, Hertz took measures such as limiting the torque and speed on EVs, offering them to experienced platform users for easier adaptation.
The company's decision to opt for gas-powered vehicles and sell its EVs underlines the challenges faced by the EV sector as sales growth slows. This trend has prompted major automakers like General Motors and Ford to revise their production plans. Morgan Stanley analyst Adam Jonas suggests that Hertz's move signals a need to recalibrate expectations for EVs downward.
While consumers appreciate the driving experience and fuel savings per mile of EVs, Jonas points out "hidden costs to EV ownership," with collision and damage expenses, particularly associated with EVs, remaining high.
Hertz anticipates approximately $245 million in charges related to depreciation expenses from the EV sale in the fourth quarter of 2023.
The decision aligns with a broader trend as other rental companies, like Sixt, also adjust their EV strategies. Sixt revealed it had not purchased Tesla vehicles since 2022 and is selling its Tesla fleet as part of a routine de-fleeting process. However, Sixt remains committed to electrifying 70-90% of its rental fleet in Europe by 2030.
As EV prices, both new and used, experience fluctuations, Hertz's move contributes to the downward trend in used EV values. Industry analysts predict a significant loss for Hertz on each of the 20,000 EV sales. Hertz is listing some Tesla Model 3 units for as low as approximately $20,000, nearly half the purchase price for the cheapest variant of the compact sedan.
The current scenario suggests a challenging road ahead for EV growth, prompting a reevaluation of expectations and strategies within the automotive industry.
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