Hertz says it is reassessing its electric vehicle (EV) strategy due to Tesla’s price reductions and unexpectedly high repair costs. The news was announced during the company’s third-quarter earnings call on Thursday.
Hertz initially announced its planed to order 100,000 Tesla vehicles and have them in their global rental fleet by the end of 2022. However, this plan has encountered several roadblocks. Tesla’s aggressive price cuts have significantly reduced the resale value of the EVs in Hertz’s fleet, leading to a one-third decrease in their value.
Moreover, the rental car company has experienced higher-than-anticipated repair costs for its EVs. CEO Stephen Scherr explained that these unexpected expenses, especially in the context of vehicle damage, have impacted Hertz’s margins. (via CNBC)
Despite these challenges, Scherr affirmed Hertz’s commitment to buying 100,000 cars from Tesla.
Hertz currently has around 50,000 electric vehicles in its fleet, with approximately 35,000 of them being Teslas. The company has also signed deals to purchase up to 175,000 EVs from GM and up to 65,000 from Polestar. However, Hertz’s goal of having EVs represent a quarter of its fleet by the end of 2024 now seems unlikely.
Scherr expressed the company’s intention to work closely with EV manufacturers like Tesla and parts suppliers to address the repair cost issue. As EV prices continue to stabilize and decline, Hertz anticipates buying more electric vehicles, capitalizing on their improved cost-effectiveness.