- Hertz had wanted 25% of its fleet to be EVs by end of 2024 but is now reversing course
- Hertz is selling 20,000 EVs from its US fleet of around 50,000 EVs
- They will use some of the money to buy gas-powered cars instead
- Hertz claims demand for EVs has declined and they are much more expensive to maintain/repair
- Selling the EVs means Hertz will lose around $245 million due to depreciation from Tesla’s price cuts
In October 2021, Hertz, sent shockwaves through the rental car and EV industries by announcing an agreement to buy 100,000 Teslas by the end of 2022. The move was part of the company’s bold plan to electrify its fleet, with a goal of having EVs account for a quarter of rentals by 2025. Football legend Tom Brady was even brought in to spearhead glitzy ads proclaiming Hertz as “The New Hertz” of the modern, electric era.
Yet barely a year later, Hertz has slammed the brakes on EVs. The company is offloading 20,000 EVs from its US fleet of around 50,000, according to an SEC filing. Part of the $245 million expected from selling the EVs will go towards buying good old gas-powered cars instead.
So much for leading the charge into the electric future.
What soured Hertz on EVs?
The rental car company points to declining demand for electric rentals, despite inking additional deals in 2022 to buy a combined 240,000 EVs from Polestar and General Motors. It seems consumer interest hasn’t lived up to the hype. According to CNBC, “The demand that did arise tended to come from customers who were already Tesla or EV owners.”
But lackluster demand isn’t the only speed bump in the Hertz EV strategy. Hertz was blindsided by the costs of repairing and maintaining its growing EV fleet. Collisions and damage expenses with EVs have proven substantially higher than gas-powered cars. At the same time, Tesla’s recent price cuts spelled a major drop in resale value across Hertz’s EV roster.
With rental customers apathetic and expenses mounting, Hertz is pumping the brakes on its EV experiment. The 20,000 vehicles being sold amount to nearly a third of its electric fleet. Hertz had aspired to make EVs a quarter of its rentals in just two years’ time. Now it seems that ambitious goal is destined for the scrapyard.
The Entire Auto Industry Is Rethinking EV Strategies
Hertz isn’t alone in rethinking the pace of the EV revolution. Across the auto industry, car makers are dialing down investments as demand slows and batteries remain expensive. For Hertz, dreams of leading the charge into an electric future have collided head-on with the bumpy reality of budgets, bottomed-out residuals, and a lack of interest from rental customers.
The road ahead for EVs is long – and expectations need to shift gears… for now.
Frank Wilson is a retired teacher with over 30 years of combined experience in the education, small business technology, and real estate business. He now blogs as a hobby and spends most days tinkering with old computers. Wilson is passionate about tech, enjoys fishing, and loves drinking beer.