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Rental Company Hertz Swaps Out Electric Vehicles, Including Tesla’s, For Gas Powered Ones

Rental Company Hertz Swaps Out Electric Vehicles, Including Tesla’s, For Gas Powered Ones
In another indication that EV demand has decreased is the rental company Hertz Global Holdings, which is selling nearly 20,000 electric vehicles, including Teslas, from its U.S. fleet almost two years after an agreement with the automaker to rent out its vehicles.
Hertz announced on Thursday that it will instead choose gas-powered cars, citing increased costs associated with accident and damage for electric vehicles (EVs) despite having planned to convert 25% of its fleet to electric by the end of 2024.
The previous year at the JPMorgan Auto Conference, CEO Stephen Scherr had mentioned challenges arising from increased costs for its electric vehicles, specifically Teslas.
In order to make it easier for experienced customers to adjust, Hertz even lowered the torque and speed of the EVs and made it available to them, he claimed, after some users had front-end crashes.
The company's stock, which also sells cars from Swedish EV manufacturer Polestar, among others, dropped by almost 4%. The stock of Tesla was down almost 3%.
In the fourth quarter of 2023, Hertz also anticipates charges of roughly $245 million for depreciation expenses resulting from the sale of EVs.
Its decision highlights the rough ride electric vehicles (EVs) have had as their sales growth slows, leading automakers to reduce their production goals, including General Motors and Ford.
In a note, Morgan Stanley analyst Adam Jonas stated that Hertz's action was yet another indication that EV expectations needed to be "reset downward".
According to Jonas, there are additional "hidden costs to EV ownership" despite the fact that drivers appreciate the driving pleasure and fuel savings (per mile) of electric vehicles.
"Expenses related to collision and damage, primarily associated with EVs, remained high in the quarter," Hertz said in a regulatory filing on Thursday.
The firm announced that it would concentrate on increasing the profitability of the remainder of its EV fleet. Previously, it had intended to order 100,000 Tesla vehicles by the end of 2022 and 65,000 units from Polestar over a five-year period.
Sixt, a German car rental company, announced in December that it was selling its fleet of Teslas "as part of our regular de-fleeting process" and that it had not purchased any Teslas before 2022.
It stated on Thursday that it "sticks to our goal to electrify 70-90 percent of our rental fleet in Europe by 2030" and that it still intends to provide a selection of electrified cars.
According to Cox Automotive data, wholesale used-EV prices decreased throughout the majority of 2023 as new EV costs decreased and inventories of unsold electric vehicles increased.
Prior to Hertz's announcement, Cox predicted that in 2024, used-EV prices would drop more than used car prices overall.
"While 20,000 cars isn't a large number in the total used vehicle market, it does mean Hertz will be taking a major loss on each of these sales while further contributing to the trend of falling used EV values," analyst Karl Brauer said.
According to its used car website, Hertz is offering some Tesla Model 3s for as little as $20,000, which is almost half the cost of the least expensive version of the small sedan.
More than 700 EVs are listed for sale, including the Model 3 and Model Y SUVs from Tesla, the BMW i3, and the Bolt from Chevrolet.

Christopher J. Mitchell

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