Hertz is selling 20,000 EVs and replacing them with gas cars
Hertz is selling off a third of its electric vehicle fleet, which is predominantly made up of Teslas, and will buy gas cars with some of the money it makes from the sales. The company cited lower demand for EVs and higher-than-expected repair costs as reasons for the decision.
The sell-off began last month and will continue through 2024. As some electric vehicle-focused blogs have noted, they’re being sold at steep discounts. The company said in a Thursday morning filing that it is recognizing “approximately $245 million of incremental net depreciation expense related to the sale,” which is a dry way of saying it’s taking a bath on the decision. Hertz told shareholders that it believes it will be able to make up that loss in the coming years.
Hertz’s move to slash its EV fleet comes as electric vehicle sales growth has cooled from record highs. The news also follows recent comments from Hertz’s global CEO Stephen Scherr about how the rental giant was dealing with high repair costs — in part because many of the Teslas were being used by Uber drivers — and dramatic depreciation thanks to Tesla’s drastic price cuts.
Just two years ago, Hertz announced plans to buy 100,000 EVs from Tesla by the end of 2022. The news helped Hertz distance itself from a chaotic bankruptcy and pushed Tesla’s valuation over the $1 trillion mark for the first time. But it never happened.
Instead, as of October 2023, Hertz had only purchased 35,000 Teslas and its entire electric fleet included about 50,000 EVs total. Scherr maintained at the time that his company was “committed” to buying 100,000 cars from Tesla, even while he admitted that the automaker’s price cuts had shrunk the value of its modest EV fleet.
Hertz didn’t just overpromise with Tesla. It announced plans in 2022 to buy up to 175,000 EVs from General Motors, and another 65,000 from Polestar. The company did not say Thursday how its decision to sell a third of its EV fleet will impact those plans, and didn’t immediately respond to a request for comment.
The sell-off began last month and will continue through 2024. As some electric vehicle-focused blogs have noted, they’re being sold at steep discounts. The company said in a Thursday morning filing that it is recognizing “approximately $245 million of incremental net depreciation expense related to the sale,” which is a dry way of saying it’s taking a bath on the decision. Hertz told shareholders that it believes it will be able to make up that loss in the coming years.
Hertz’s move to slash its EV fleet comes as electric vehicle sales growth has cooled from record highs. The news also follows recent comments from Hertz’s global CEO Stephen Scherr about how the rental giant was dealing with high repair costs — in part because many of the Teslas were being used by Uber drivers — and dramatic depreciation thanks to Tesla’s drastic price cuts.
Just two years ago, Hertz announced plans to buy 100,000 EVs from Tesla by the end of 2022. The news helped Hertz distance itself from a chaotic bankruptcy and pushed Tesla’s valuation over the $1 trillion mark for the first time. But it never happened.
Instead, as of October 2023, Hertz had only purchased 35,000 Teslas and its entire electric fleet included about 50,000 EVs total. Scherr maintained at the time that his company was “committed” to buying 100,000 cars from Tesla, even while he admitted that the automaker’s price cuts had shrunk the value of its modest EV fleet.
Hertz didn’t just overpromise with Tesla. It announced plans in 2022 to buy up to 175,000 EVs from General Motors, and another 65,000 from Polestar. The company did not say Thursday how its decision to sell a third of its EV fleet will impact those plans, and didn’t immediately respond to a request for comment.
Car rental firm Hertz to sell 20,000 EVs for gas-powered vehicles
In This Article:
(Reuters) -Rental firm Hertz Global Holdings said on Thursday it would sell about 20,000 electric vehicles from its U.S. fleet due to higher expenses related to collision and damage, and will opt for gas-powered vehicles.
Shares of the company, which operates vehicles from Tesla Inc and Swedish EV maker Polestar among others, fell about 3% at market open.
The company said it would continue to focus on improving profitability for the remainder of its EV fleet.
Hertz's used car website lists more than 700 EVs on sale including BMW's i3, Chevrolet's Bolt and Tesla's Model 3 and Model Y SUVs.
(Reporting by Nathan Gomes and Akash Sriram in Bengaluru; Editing by Shilpi Majumdar and Sriraj Kalluvila)
Shares of the company, which operates vehicles from Tesla Inc and Swedish EV maker Polestar among others, fell about 3% at market open.
- Hertz had said it would order 100,000 Teslas by the end of 2022 and followed that with a decision to buy up to 65,000 units over five years from Polestar.
- "Expenses related to collision and damage, primarily associated with EVs, remained high in the quarter...," Hertz said in a regulatory filing on Thursday.
- The company had previously set a target for 25% of its fleet to be electric by the end of 2024.
The company said it would continue to focus on improving profitability for the remainder of its EV fleet.
Hertz's used car website lists more than 700 EVs on sale including BMW's i3, Chevrolet's Bolt and Tesla's Model 3 and Model Y SUVs.
(Reporting by Nathan Gomes and Akash Sriram in Bengaluru; Editing by Shilpi Majumdar and Sriraj Kalluvila)
No comments:
Post a Comment