In a notable shift, Hertz is downsizing its electric vehicle (EV) fleet by a third, replacing about 20,000 EVs with gasoline-powered cars. This decision, disclosed in a recent regulatory filing, stems from higher damage-repair costs and accelerated depreciation, influenced by Tesla’s price adjustments.
During Q3 2023, Hertz reported to investors that Tesla’s pricing changes adversely impacted the resale value of other EVs in its fleet, resulting in increased depreciation expenses and salvage costs.
Market dynamics, primarily influenced by Tesla’s 2023 price reductions, have steered consumers away from buying used EVs from Hertz. Currently, Teslas make up 80% of the company’s electric cars, constituting about 11% of Hertz’s rental fleet, with 35,000 out of approximately 50,000 electric vehicles being Teslas.
Contrary to its green commitment in May, aiming for 25% of its 500,000 car fleet to be electric by 2024, Hertz is now making a significant adjustment. Initially benefiting from a market price drop during its EV buying spree, Hertz’s current position reflects a substantial change in perspective.
CEO Stephen Scherr, once optimistic about lower EV prices, now anticipates an estimated loss of around $245 million, roughly $12,250 per vehicle, according to a Securities and Exchange Commission filing. This financial setback highlights the challenges tied to the swift depreciation of EVs, portraying the evolving landscape of Hertz in the automotive market.
