In a notable change of strategy, Hertz Global Holdings Inc. has announced its intentions to sell about 20,000 electric vehicles (EVs), including its fleet of Tesla Model S sedans. This decision contrasts sharply with Hertz’s previous goals of having 25% of its global fleet powered by electricity by the end of 2024. The move is a response to the decreasing demand for EVs, a trend that has caused major automakers like General Motors and Honda Motor to reconsider their EV strategies.
Matching Supply and Demand
Hertz’s decision to sell a significant portion of its EV fleet aims to better align its supply with the current demand. While EVs remain a promising segment of the automotive industry, they have not yet become the preferred choice for rental cars. Hertz CEO Stephen Scherr acknowledged this reality, stating that although he believes the rental industry will eventually transition to EVs, it is not happening as quickly as initially anticipated.
Affordable EV Options
As part of this strategic shift, Hertz is offering its EV fleet for sale at highly competitive prices, with some models listed as low as $17,700. Prospective buyers can purchase these vehicles through Hertz Car Sales, and certain used EVs are eligible for federal tax credits of up to $4,000. To provide potential buyers with a comprehensive experience, Hertz also offers a Rent2Buy program that allows customers to rent a vehicle for up to three days or take a free two-hour test drive before committing to a purchase.
Improving Financial Performance
Significantly, the proceeds from the sale of these EVs will be used to acquire internal combustion engine cars, as Hertz expects this move to enhance its financial performance by the same amount as the $245 million in additional net depreciation expense over the next two years. This decision is influenced by factors such as the declining market value of EVs and recent price reductions by Tesla, which have a considerable impact on vehicle depreciation. Although customers have shown interest in renting EVs, the demand was not sufficient to justify maintaining such a large EV fleet. Thus, Hertz’s move is seen as a necessary adjustment of EV expectations in the auto industry.
