Hertz backtracks on fleet electrification

The car hire company Hertz plans to sell 20,000 electric cars from various manufacturers in the USA over the course of this year and invest some of the proceeds in the purchase of combustion cars. This corresponds to around a third of Hertz's global fleet of electric cars.

Image: Hertz

According to a statement from Hertz, the move is intended to “better balance the supply and expected demand for electric vehicles” and enable the company to “eliminate a disproportionate number of lower-margin rentals and reduce the damage costs associated with electric vehicles”. According to Bloomberg, Hertz has pushed for increased sales of electric cars in the US in December and is taking an additional $245 million write-down to do so. However, the car rental company is expected to increase its operating profit.

Hertz had already announced in October that it would not push ahead with the expansion of its electric fleet as quickly as previously planned. For example, the repeated price reductions by Tesla had also reduced the resale value of the electric cars. In addition, repairs to electric cars were more cost-intensive than expected, it was said at the time.

In autumn 2021, Hertz announced that it would buy 100,000 Teslas, half of which were to be made available to Uber drivers in the USA. Hertz also wanted to rent a further 25,000 electric cars to Uber drivers in European capitals, including models from Tesla and Polestar. The car hire company had commissioned Polestar to supply up to 65,000 electric cars. Hertz placed another order for up to 175,000 electric cars with General Motors.

In the meantime, disillusionment has set in. Hertz’s global EV fleet currently consists of around 60,000 units. Stephen Scherr, Chief Executive Officer of Hertz, told Bloomberg that the high costs associated with electric vehicles continue – and “efforts to reduce them have proven more difficult”. Going forward, Hertz will closely monitor demand for EVs both at dealerships and within its own organisation “to decide whether the company should buy more vehicles”. For the agreement to buy 175,000 electric vehicles from GM 65,000 from Polestar over the next four years “could take much longer,” Scherr said.

The Bloomberg article does not comment on the Tesla order. In February 2023, it was reported that Hertz had integrated a good 48,300 Teslas – not even half of the original order quantity. When Hertz announced the major order in 2021, it was seen as a potential breakthrough for Tesla in the fleet business – this prospect caused the Tesla share price to jump significantly. The e-car manufacturer was worth more than a trillion dollars at the time.

The news agency speaks of a “dramatic turnaround that underscores the dwindling demand for all-electric cars in the US”. Growth in electric car sales slowed sharply over the course of 2023 and rose by just 1.3% in the last quarter.

Car hire company Sixt is also reportedly phasing out electric cars from Tesla. The residual value problem, which seems to affect Tesla more than other brands, is apparently also playing a special role at Sixt.



about „Hertz backtracks on fleet electrification“

Leave a Reply

Your email address will not be published. Required fields are marked *