Hertz Sells 20,000 EVs, Hits Brakes on Electric Fleet Expansion
Hertz Global Holdings (HTZ.O) is making a sharp U-turn on its electric vehicle (EV) ambitions. The rental giant announced plans to sell 20,000 EVs from its U.S. fleet, citing higher repair costs as the driving force behind the decision.
Collision Costs Drive EV Exit: Hertz points to “elevated expenses related to collision and damage, primarily associated with EVs,” as the key reason for the shift. This suggests repairs for damaged EVs are proving too expensive, impacting the company’s bottom line.
Stock Takes a Tumble: The news sent shockwaves through the market, with Hertz shares dropping up to 9% in premarket trading. Investors appear concerned about the company’s strategic change and its potential impact on future profitability.
From Tesla to Gas Pumps: Hertz had previously embraced EVs, partnering with Tesla (TSLA.O) and Polestar for a major fleet expansion. This included plans to acquire 100,000 Teslas by 2022 and 65,000 Polestar EVs over five years. However, the high repair costs seem to have thrown a wrench in those plans.
Financial Reality Bites: The sale is expected to generate $245 million in depreciation expenses for Hertz in the fourth quarter of 2023. This highlights the financial realities of transitioning to EVs, where high initial purchase costs are often offset by lower operating expenses in the long run. However, high repair costs can quickly tip the scales in the wrong direction.
EV Roadblock? This move by Hertz raises questions about the challenges companies face in adopting electric vehicles. While sustainability and environmental benefits are undeniable, operational costs and market dynamics remain crucial considerations. The Hertz decision serves as a cautionary tale for other companies navigating the EV landscape.
Used EV Bonanza: If you’re looking for a used EV, Hertz’s website might become your new hunting ground. Over 700 EVs, from BMW’s i3 to Tesla’s Model Y, are currently up for grabs. But be sure to factor in potential repair costs before hitting “buy.”
Hertz’s decision signals a strategic shift in the EV race, highlighting the complexities of navigating this evolving market. While the future of electric mobility remains bright, companies need to carefully balance sustainability with financial realities to ensure a smooth ride on the road to zero emissions.
