Hertz is Selling More EVs After a $392 Million Loss
Is renting an electric vehicle a good idea? Electric cars do have a few benefits to consider, but Hertz learned the hard way that they aren’t very popular to rent. Significant financial losses lead to Hertz selling more EVs.
Why is Hertz selling more EVs?
Hertz is selling more EVs because not enough people are renting them. Plus, electric vehicles often have large repair costs. Reportedly, they’re more expensive and less reliable than gas-powered vehicles.
Hertz has decided to sell off 10,000 more electric cars than originally planned due to a $392 million loss during the first quarter of 2024. As a result, the fleet is losing 30,000 EVs.
Herts is selling more EVs because last quarter, it lost $195 million due to depreciation and $245 million during the fourth quarter of 2023. So the total losses from betting on electric vehicles are currently up to $440 million.
Hertz CEO Gil West shared that fleet and direct operating costs weighed on this quarter’s performance. Hertz is tackling both issues to supply the right amount of vehicles at an acceptable capital cost while increasing productivity and reducing operating costs.
Along with being a financial dream, the EVs burdened customers. Hertz shared that many drivers are unfamiliar with properly charging and driving EVs.
They simply picked them because they were available. Hertz reduced torque and speed to make the transition to EVs easier for first-time customers. However, they still had a higher rate of front-end collisions.
Trouble mounted as Hertz agreed to buy $100,000 Tesla vehicles, but rapid price decreases to combat decreasing sales hurt Hertz’s value. Reportedly, Tesla vehicles have twice the repair costs compared to traditional cars.
Hertz paused its agreement with Polestar to buy new EVs. Hertz partnered with Uber to add 50,000 cars to the company’s network too.
The plan for Hertz to have a quarter of EVs in its fleet by the end of 2024 might be scraped. Hertz took a riskier gamble with EVs compared to other rental companies because it owns all the vehicles in its fleet.
As a result, it faces higher vehicle depreciation rates. Selling more EVs may not return as much money as expected.
