Hertz is dealing with substantial financial setbacks after its ambitious investment in electric vehicles (EVs) backfired, leading to a fire sale of thousands of EVs in an attempt to reduce mounting depreciation costs and stabilize the business. The company’s recent third-quarter earnings report reveals a bleak picture: substantial losses, skyrocketing depreciation expenses, and an aggressive strategy shift as Hertz aims to streamline its fleet and mitigate further financial erosion.
In 2021, Hertz made headlines by announcing a purchase of 100,000 Tesla EVs. The strategy was initially a hopeful one, aimed at transitioning the fleet to a more sustainable model while benefiting from lower maintenance costs. EVs, with fewer moving parts, were projected to reduce upkeep and offer Hertz a competitive edge. However, in practice, the plan has led to unanticipated challenges.
With Tesla’s repeated price cuts on EVs however, Hertz found itself holding a fleet whose value plummeted, accelerating depreciation costs. According to recent data, Hertz’s EV depreciation reached $537 per car per month, a staggering 89% increase, driving losses across the board.
As a result, Hertz’s CEO Gil West is prioritizing a fleet overhaul, selling off tens of thousands of these EVs by the year’s end. Hertz’s plan is to sell approximately 30,000 EVs, which include Tesla, Hyundai, Kia, Chevrolet, Mercedes-Benz, Nissan, Subaru, Ford, Volvo, and Polestar EVs, by the end of 2024, aiming to bring its EV count in line with actual customer demand, which the company says has been weaker than anticipated.
For consumers, the upside of Hertz’s fire sale includes the opportunity to purchase a used EV at a great price, like a Tesla Model 3 for under US$20,000 or a Chevy Bolt for under US$15,000. Combined with federal tax credits, these vehicles could be attractive to EV buyers looking for more affordable options, although high mileage may be a consideration.
You can view Hertz’s EVs for sale on their website.
