Hertz Ditches 20,000 Electric Vehicles Due To 'High Related Expenses'
1min read American rental car giant Hertz announced on Thursday its intention to sell 20,000 electric vehicles, including Teslas, opting to return to fuel cars due to the cost of maintenance and low leasing profits.
Hertz announced that it plans to dump approximately 20,000 electric vehicles at low prices, many of which are Tesla Model S sedans. In a regulatory filing on Thursday, the company stated that a portion of the proceeds from the sale of these 20,000 electric cars will be used to purchase fuel cars to meet customer demand.
Following the news, both Hertz and Tesla's company stocks fell, with Hertz dropping by 4.28% and Tesla by 2.87%.
The car rental company had announced its bet on electric vehicles in 2021 and received an order for 100,000 electric cars from Tesla, a deal that propelled Tesla's valuation to exceed $1 trillion.
However, Thursday's announcement signifies a dramatic shift in Hertz's corporate strategy. The company explained that the move was aimed at better balancing the supply of electric vehicles with anticipated demand, canceling a substantial amount of low-profit leasing business, and reducing the maintenance costs associated with electric vehicles.
During the company's Q3 earnings call, Hertz expressed the desire to reduce its fleet of electric vehicles, particularly Tesla's. The company pointed out that collision and damage repair costs for electric vehicles are higher compared to conventional cars, which impacted the company's Q3 performance and negatively affected EBITDA profits.
The list published on the Hertz website this time includes the 2021 Tesla Model 3 Standard Range Plus sedan with a mileage of 31,647 miles, selling for $20,125. A 2022 Tesla Model Y Long Range SUV with a mileage of 92,789 miles is priced at $40,886.
Senior Editor for Kelley Blue Book, Sean Tucker, browsed the lists of used Teslas offered by Hertz and expressed his mixed feelings, as he found out the prices are surprisingly reasonable for used electric cars.
A company spokesperson stated that Hertz is selling a variety of electric vehicle brands and models and expects to launch more products in 2024. In the company's Rent2Buy program, potential buyers can rent a vehicle for up to three days or test drive for two hours for free.
Jeremy Robe, Senior Director of Economic and Industry Insight at Cox Automotive pointed out that mileage is not necessarily the most important consideration factor when considering purchasing a used electric vehicle. More important is the quality of the battery and tires, which wear out faster than gasoline-powered cars.
He thinks Nearly 60% of an electric vehicle's value is related to the battery, and the battery degrades with use.