Hertz will sell approximately 20,000 electric vehicles from its US fleet, or about one-third of the company’s global EV line-up, citing high repair costs, high depreciation and low customer demand.
In a US Securities and Exchange Commission report, the rental car giant said it expects to reinvest a portion of the proceeds from the sale of EVs into the purchase of internal combustion engine vehicles to meet customer demand. The vehicle dispositions, which were initiated in December 2023 and are expected to take place “in an orderly fashion” over the course of 2024, will cover multiple makes and models.
The news follows Hertz’s 2021 announcement that the company would offer the largest EV rental fleet in North America and one of the largest in the world by placing an initial order for 100,000 Teslas by the end of 2022 and investing in new EV charging infrastructure across the company’s global operations.
“We took a bold move and are making a strategic adjustment to our fleet to take 20,000 electric vehicles out of the fleet,” Hertz CEO Stephen Scheer told CNBC. “It’s really to respond to the reality, which is we’re trying to bring supply in line with demand and we are addressing a cost issue that happens to be related to the EVs and in the context of damage and damage cost.
“In the end, this is about the numbers; it’s about the financial performance and depreciation but equally the operational integrity of the business.”
According to CNN, Scheer said collision and damage repairs on an EV can often be around twice that of a comparable combustion engine vehicle, and that EV renters crashed at greater frequency. About 80 per cent of Hertz’s EVs are Teslas, while EVs make up about 11 per cent of Hertz’s total rental fleet.
“Our work with Tesla is to look at the performance of the car so as to lower the risk of incidence of damage,” he said, “and we’re in very direct engagement with them on parts procurement and labour and the like.”
Scheer said another part of the problem was that the company experienced the consequence of a significant price decline in EVs, saying, “…at the beginning of the year when Tesla took down the price of their cars – residual price falls, depreciation goes up; that’s obviously a cost to the business.”
Giving motorists a chance to try an EV before they buy was also touted as a reason to invest in the vehicles, but Scheer said that it was not happening at a level of demand that justified Hertz maintaining the fleet size “at this moment in time”.