Reuters title: Hertz pops its EV bubble
By: Joseph White, Global Automotive Correspondent
Date: 12 January 2024
“Hertz will dump 20,000 electric vehicles, many of them Teslas, from its fleet and buy more gasoline cars instead, slamming the brakes on an electrification strategy that has proven more costly than management expected.
Hertz shares slumped on the news. The retreat will cost the company $245 million in writeoffs. Hertz said it expects to save a like amount over the next two years by avoiding high repair costs and rapid price depreciation it has experienced with EVs.
Most of the repair cost and depreciation problems related to Tesla models, which were 80% of Hertz’s EV fleet, company executives said during an October teleconference.
Hertz’s move promises to increase pressure on both new and used electric vehicle markets in the United States.
Used EV prices in the U.S. market were already dropping faster than overall used vehicle prices during 2023, according to data from used EV market tracker Recurrent and Cox Automotive. Price cutting by Tesla and other manufacturers has hammered EV resale values – and hurt Hertz’s bottom line.
Hertz said in an SEC filing that reducing its EV fleet by a third will “position the Company to eliminate a disproportionate number of lower margin rentals and reduce damage expense associated with EVs.”
That sort of talk won’t help new vehicle manufacturers convince consumers that EVs can be cheaper to own and operate than a petrol-fueled model.
“Seeing the problems the company is having related to collision, repair, other opex (operating expenses) and residual values is a warning across the EV space,” Morgan Stanley analysts told clients.
In 2022, Hertz announced plans to buy 100,000 Teslas and 65,000 electric vehicles from Geely-Volvo EV brand Polestar. The company touted EV rentals in ads starring U.S. football legend Tom Brady. Now, Tesla, Polestar and other EV marketers won’t be able to count on Hertz to buy in bulk to offset ups and downs in consumer demand.
Other rental car companies are retreating from electric vehicles.
Sixt, a European rental car company, stopped ordering Teslas in 2022 and said in December it would be phasing them out. Sixt says it still plans to electrify 70%-90% of its European fleet by 2030. “Electrify” is industry code for a mix of fully electric and gas-electric hybrid vehicles.”
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