Amidst declining demand and high maintenance costs, Hertz Global Holdings offloads 20,000 electric vehicles, including Teslas, shaking up the EV market and impacting shares of Tesla and other EV manufacturers.
Car rental company Hertz Global Holdings is offloading approximately 20,000 electric vehicles, including Teslas, from its U.S. fleet. This move comes nearly two years after their agreement to rent out these vehicles, signalling a decrease in EV demand. Hertz is now favouring gasoline vehicles, attributing this shift to the higher costs associated with EV collision and damage repairs. Despite previous plans to electrify 25% of its fleet by the end of 2024, the company has faced challenges, as noted by CEO Stephen Scherr at last year’s JPMorgan Auto Conference. Hertz even had to restrict torque and speed on their EVs for safety reasons.
The company’s stock, along with shares from Tesla and other EV manufacturers like Swedish brand Polestar, experienced a decline following this announcement. Hertz anticipates around $245 million in charges due to the depreciation of these EVs in the fourth quarter of 2023.
This decision highlights the challenges facing the EV market, with slowed sales growth prompting automakers like General Motors and Ford to adjust production plans. Morgan Stanley analyst Adam Jonas suggests that this indicates a need to reevaluate EV market expectations, particularly considering the hidden costs of EV ownership.
Hertz, which initially aimed to add 100,000 Teslas and 65,000 Polestar vehicles to its fleet, is now concentrating on boosting profitability with its remaining EVs. In a similar vein, German rental car firm Sixt has stopped buying Teslas since 2022 and is selling off its Tesla fleet as part of its regular vehicle turnover process, though it remains committed to electrifying a significant portion of its European fleet by 2030.
In the used EV market, prices have been dropping throughout 2023, a trend that is expected to continue into 2024. Hertz’s decision to sell a portion of its EV fleet, including Tesla Model 3s, at significantly reduced prices is contributing to the declining value of used electric vehicles. This shift in Hertz’s strategy underscores the complexities and evolving landscape of the electric vehicle market.