EV Sales & Resale Values Tank As Hertz Dump EV Fleet
Hertz Global are scaling back renting electric cars as the market for secondhand EV vehicles on particular Tesla vehicles crash and repair costs skyrocket, the fleet is being replaced with petrol- and diesel-powered vehicles.
Rental Companies make their money when it comes to selling their rental cars and the collapse in price is having a major impact on their revenues.
Back in 2021 Hertz announced plans to buy 100,000 vehicles which they are now realizing was a big mistake.
As a result, they plan to sell a major share of its US electric vehicle fleet and reinvest in petrol powered cars due to weak demand and high repair costs for its battery-powered options.
Initially they are hoping to sell 20,000 EVs according to a regulatory filing.
Hertz will record a non-cash charge in its fourth-quarter results of about $245 million related to incremental net depreciation expense.
The dramatic about-face comes as US drivers who purchased an EV vehicle moving back to petrol vehicles a move that underscores the waning demand for all-electric cars in the US.
EV sales growth slowed sharply over the course of 2023, rising just 1.3% in the final quarter as consumers were put off by high costs, interest rates expensive repair costs and the falling value of secondhand EV vehicles.
“The elevated costs associated with EVs persisted,” Hertz Chief Executive Officer Stephen Scherr said in an interview.
“Efforts to wrestle it down proved to be more challenging.”
The shift back to more conventional cars by businesses who initially invested in EV vehicles is now having an impact on sales.
The move marks a reversal of a strategy centered initially on EVs by several businesses.
The plan to unload EVs should improve Hertz’s cash flow and earnings this year and next.
By year-end 2025, the company expects improved financial results driven by higher revenue per day and lower depreciation and operating expenses.