After an ambitious electric vehicle push in recent years, the Hertz rental car company will reduce its EV fleet by one-third to make room for more gasoline-powered vehicles.
In a regulatory filing submitted Thursday, the car rental giant said it will scale back roughly 20,000 electric vehicles as they have higher damage-repair costs and higher depreciation.
Hertz told investors at the end of the third quarter of 2023 that Tesla price cuts reduced the resale value of the other EVs in its fleet, “increasing vehicle depreciation expense and negatively impacting salvage cost.”
Primarily driven by Tesla dropping prices of new vehicles in 2023, people are now less likely to buy used EVs from Hertz.
Around 80% of the battery electric cars are Teslas at the company, and EVs make up around 11% of Hertz’s total rental fleet. Out of Hertz’s roughly 50,000 electric cars, about 35,000 are Teslas.
As recently as May, Hertz was reportedly all in on greener vehicles, hoping to have 25% of its 500,000 car fleet be electric by the end of 2024, according to CNBC. Hertz agreed to buy about 200,000 EVs from Tesla and Polestar while also making a deal with Uber to let drivers rent the vehicles.
Initially, the market price drop benefited Hertz with its EV buying spree.
CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER
“I think the drop in price on EVs is an encouraging proposition for us in that if I’m 10% moving to 25%, and I’ll get higher from there, I’m obviously a happier and a better buyer at a lower price point than not,” Hertz CEO Stephen Scherr said last year, per CNBC.
Now the company is expected to take a loss of approximately $245 million, or about $12,250 per vehicle, due to the depreciation, according to the Securities and Exchange Commission filing.
