Posted on 01/11/2024 10:23:45 PM PST by SeekAndFind
Just a few months ago, Hertz committed to making electric vehicles a quarter of its rental fleet. They had already announced an intent to partner with Tesla as a major provider for their future fleet, which had pushed Tesla’s value even higher. Supposedly, the scale of the demand and usage would lower costs across the board and make fleet maintenance all that much easier for Hertz and other rental agencies.
Now, however, Hertz has hit reverse — and taken a big hit to its bottom line. Bloomberg reports today that the leading rental company wants to sell off a full third of its existing EVs and replace them with gasoline-powered vehicles:
Hertz Global Holdings Inc. plans to sell a third of its US electric vehicle fleet and reinvest in gas-powered cars due to weak demand and high repair costs for its battery-powered options. …
The dramatic about-face, after Hertz announced plans in 2021 to buy 100,000 Tesla Inc. vehicles, underscores the waning demand for all-electric cars in the US. EV sales growth slowed sharply over the course of 2023, rising just 1.3% in the final quarter as consumers were put off by high costs and interest rates.
“The elevated costs associated with EVs persisted,” Hertz Chief Executive Officer Stephen Scherr said in an interview. “Efforts to wrestle it down proved to be more challenging.”
This move doesn’t come cheap for Hertz, either. They will take a $245 million charge to its Q4 earnings as a depreciation hit. That may continue for a while, as it may take all year to sell off the used EVs in a market where demand for new EVs has dipped dramatically. That led to a sell-off this morning that saw Hertz’ share price drop 4.3% in the first hour of trading, and only bounce back to a net drop of 3.5% by mid-afternoon — and then slide again to a 4.55% drop later.
Hertz had thrown out warning signs that their bold EV strategy was failing, as Andrew Stuttaford points out at NRO. Last October, Bloomberg had reported that Hertz planned to slow down their acquisitions of Teslas for two reasons. First, the repair costs that were supposed to decline at fleet scope were instead still rising for EVs. More importantly, Tesla had begun slashing sales prices for new vehicles as demand had dropped off, which inverted the value of their fleet (emphasis Stuttaford’s):
Tesla has been rapidly dropping its prices to spur sales, which has lowered the resale value of the EVs in Hertz’s fleet by about one-third. Repair costs for EVs have also been higher than expected, about double what the company pays to fix damaged gasoline cars, Chief Executive Officer Stephen Scherr said in an interview Thursday.
Hertz will slow the pace of buying EVs while it learns how to manage costs, Scherr said. Hertz has 50,000 EVs currently, of which 35,000 are Tesla models. EVs account for about 11% of its total fleet.
Scherr said Hertz remains committed to buying 100,000 cars from Tesla and 175,000 EVs from General Motors Co., but the rental company won’t meet its goal to have EVs account for 25% of the fleet by the end of 2024, he said. The first order of business is to work with parts suppliers to lower repair costs. As EV prices settle, Hertz will buy more of them, he said.
That option appears to have expired with this announcement. It’s possible that Hertz might look for an EV supplier with lower prices, but Tesla’s already cut its MSRP. Perhaps the repair costs for GM EVs will be lower, but … does anyone who has owned a GM car believe that? Scherr says that GM will be a key part of their EV strategy moving forward, but if the problem was just Tesla, then why are they replacing these cars with traditional internal-combustion vehicles?
Hertz plans to use some of the money raised by selling off EVs to buy gas-powered vehicles. “The company expects this action to better balance supply against expected demand of EVs,” it said in the filing.
There is also the question of just how much money Hertz can raise in this sell-off. Tesla undercut the value of its used models with its sharp price reductions on new vehicles, but demand may not be the only problem in the secondary market. The maintenance costs that proved prohibitive for Hertz at fleet scale will be worse for consumers on an individual basis. Plus, with questions about battery life and charging infrastructure still acute for consumers, buyers may be leaning back to gas-powered vehicles for used cars too.
One has to wonder if the resale and maintenance costs are Hertz’ only issues with EVs, too. How enthusiastic were its customers to rent EVs? After all, most people rent cars for travel to other cities, where they have less knowledge of infrastructure and likely have little or no access to charging stations where they are lodging. There are still gas stations at almost every major intersection in American cities and suburbs, and refilling a tank takes a lot less time than recharging a battery — and that time matters on vacation as well as on business trips.
The truth is that EVs are a largely impractical choice for rentals as well as a more expensive option for the agencies. And as the nation’s largest car-rental company just found out, the truth Hertz.
But I bet their ESG score in 2023 was awesome, dudezzz.
Bloomberg’s analyst finds this reversal rather stunning, but Craig Trudell isn’t exactly surprised.
Another reason may be one that is little discussed, motion sickness. These made my wife very sick from a one hour Uber ride. For her, never again.
LOL...who wants to buy a used EV?
And they’re still going to buy 275,000 more EVs. If I was one of their shareholders I might have mixed feelings about the company’s o going commitment to our glorious green future
Shocker. Who wants to rent a vehicle that can’t easily be refueled? A recent media story found 3/4 chargers were unusable and they all require different payment apps. Nobody but a hardcore enviro nut would rent these cars
People renting cars for either business trips or pleasure/vacation do not have time for 1/2 hour to an hour of charging, when 5 minutes at a gas pump could have gotten them the same effect with an ICE car. This is not that hard. Time is at a premium on these trips, and EVs do not respect that.
Get woke, go broke, no joke...
Not..🤓
SIL rented one for business last year and had a bad experience. She told all her business associates and friends about it. It doesn't take long for word to get around..
Have you looked at fleet sales of EVs to the public sector?
The public sector is still buying these with taxpayer money.
I flew to Charleston in November. At the Alamo desk I was told that, since I had chosen to take the discount price set by the “Our Choice (i.e. Alamo chooses)” option, I was going to drive an EV.
I said, “No way am I driving an EV”. The clerk said, “well then, it’s gonna cost you $20 extra per day”. I said, “OK”.
After I got the paperwork to the Toyota Tacoma, I said, “I’d have been willing to pay $100 extra per day, not to have to drive an EV”. I know, it was smartass; but it felt good.
It also shows the desperation of the EV scam.
I had no idea that motion sickness in EVs was even a thing. I had to look I up. Kind of makes sense.
Yeah, when I go on one of my little 3 to 4 day agenda crammed and time restrictive business trips, I want to add as many challenges to those few days as possible! It’s just no fun, otherwise.
It made me crazy when my Leftist, woke town government had a Town Hall meeting, and one of the items that was passed was a resolution that requires all town affairs and decisions must factor in Global Warming and include it in their discussions.
I got up and said my piece, that I did not see this as an appropriate function of a town government. I wanted my town government to fix the roads, maintain a supply of clean water, etc., not require that we buy electric police cars, as they just did.
Shameful.
I am dead set against this idiotic rush towards EVs without any consideration as to the state of the technology in them, the available charging infrastructure in place for supporting them, or even the actual need for them for any kind of climate impact (because I wholly reject the fundamental assertions of the Climate Alarmists, that man-caused CO2 emissions cause increased warming.)
I fully believe climate may indeed be changing and becoming warmer over time, but it is part of the natural cyclical nature of warming and cooling on this planet, and all this blather about CO2 levels is rubbish.
I have concluded that any support of this alarmist climate change CO2 scam is a combination of a form of mass hysteria, greed from scientific community regarding research grants, and malicious entities who decades ago saw this scam as a tool to control the populace.
H.L. Mencken, someone I find unsavory due to his militant atheism and his elitism (which makes him similar to current Marxists to me) did have the ability to formulate memorable and often funny quotes, but this one is spot on with this quote back in the early-to-mid Twentieth Century that I felt got to the root of this dynamic:
"The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary."
Is there an EV-LOL-SUCKAS ping list?
As on of those persons who don’t drive much at all and (almost) never venture far from home, I also utterly reject EV’s. When my wife and I visit our children who live over 800 miles away, we either fly or rent a car. For the reasons stated in the article, I would never rent an EV for one of those trips. I got a chuckle out of the end of the article:
“The truth is that EVs are a largely impractical choice for rentals as well as a more expensive option for the agencies. And as the nation’s largest car-rental company just found out, the truth Hertz.
“But I bet their ESG score in 2023 was awesome, dudezzz.”
Poor judgement abounds.
The National strategy should be a 25-35 year or so transition and get it right all while increasing oil and gas production to sell and pay down the debt.
Same can be said for the GOP, they should be rallying around Trump, all of them and also focusing on winning the Senate and House in large numbers....instead they infight and help Biden. Go figure.
Did they purchase EV patrol cars or just EVs for administrative types like investigators?
I believe it was patrol cars. The Leftist idiot that got up to speak right after me said people with views like mine were selfish, and that we needed to do things like this “for the children “.
Yes. She she actually said that.
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