Hertz Scales Back on Electric Vehicle Fleet Amid Financial Losses
If you’re in the market to purchase an electric vehicle (EV), Hertz may be one of the first places to look. The car rental company is selling 20,000 EVs to generate funds for the purchase of additional gas-powered vehicles.
Hertz had been actively expanding its EV offerings but has decided to scale back due to the financial impact these vehicles have had on the company.
According to its SEC filing, Hertz anticipates a loss of about $245 million—averaging roughly $12,250 per vehicle—as a result of EV depreciation. The company’s EV fleet is primarily composed of Teslas, which account for about 80% of the total EV fleet. Tesla’s significant price cuts in recent years have also pushed other automakers to reduce prices, further driving down the value of EVs.
As automakers continue to compete by lowering prices on new vehicles, Hertz faces financial setbacks because depreciation heavily affects the resale value of its fleet in the used car market. Vehicle values directly influence the selection rental car companies make when determining what cars to include in their fleets.
Hertz executives also point to challenges faced with obtaining Tesla’s. With Tesla being a relatively new automaker, the company has reported higher costs and longer repair times compared to established brands. The delays stem from limited availability of replacement parts and a shortage of trained technicians. Repair costs—especially for crashes—are also significantly higher.
On a recent analyst call, Hertz CEO Stephen Scherr noted that “in the likes of other automakers, there’s decades of establishment of a broad national parts supply,” while describing Tesla’s aftermarket parts availability as “less mature.”
With Hertz pulling back on its EV investments, the situation raises an important question for consumers: Do these financial challenges signal concerns about the long-term value of purchasing an EV?
