Hertz is dumping 20,000 EVs, including Tesla models from its rental fleet, and replacing them with more gas-powered vehicles.
Hertz is selling off Tesla 3 and Y models for as little as $20,000.
The decision was driven (pun intended) by problems renters had driving unfamiliar EVs, which have faster acceleration than gas-powered vehicles, and therefore more front-end collisions. Hertz also discovered that repairing EVs is more costly than for non-EV models.
Hertz even limited the torque and speed on the EVs and tried to limit rentals to experienced users, according to Reuters, to limit accidents and repair or salvage costs.
Also, some customers balked at the $35 re-charging fee if an EV was returned with less charge than when it was rented – even though that’s about the same as the refueling fee for gas-powered rentals.
The decision to dump the Tesla fleet followed by a few months Tesla’s decision to lower the price of its models by as much as a third, in a push to get more people to buy Teslas instead of a competitor’s EV.
That lowered the resale value for used cars, impacting Hertz’ bottom line. Since rental vehicles, including Tesla, normally stay in the fleet for a year, Hertz stands to lose millions of dollars on the resale of 2022 and 2023 Teslas.
Hertz reportedly is taking a $245 Million hit to its balance sheet to dump 1/3 of its global EV fleet. Tesla models account for 80% of the Hertz EV fleet.
Expensive to Repair
According to Inc. magazine, part of that cost is because Teslas are more expensive to repair, and parts can be harder to come by than your standard fleet car. Hertz attributed the push to reduce the number of EVs in its fleet to an effort to lower what it calls “damage expense.”
A top Hertz executive quoted in Motor Trend, said that “collision and damage repairs on an EV can often run about twice that associated with a comparable combustion engine vehicle.” The difference is significant enough that it weighed significantly on Hertz earnings in 2023.
In 2021, Hertz made headlines with a multi-million dollar bet on electric vehicles, saying it would buy 100,000 Teslas, and planned to convert more than a quarter of its fleet to electric.
It was such a big deal at the time that it sent Tesla’s market value to more than $1 trillion.
Hertz EV Fleet Includes Chevrolet Bolt, Volvo, Polestar
Soon after, Hertz said it would buy 65,000 vehicles from Polestar, mostly the Polestar 2 sedan. Polestar is an offshoot of Volvo, now owned by the Chinese automaker Geeley. Polestar models are designed in Gothenburg, Sweden, and built in China..
The Hertz EV fleet also includes Chevrolet Bolt, which GM is discontinuing.
Hertz had made a big bet on adding EVs to its fleet, launching a expensive splashy ad campaign around its electric options featuring football superstar Tom Brady, who certainly did not lend his name for free.
Maybe the rental market wasn’t ready for widespread EV adoption.
But more importantly, the Hertz decision has implications for any driver who is thinking about buying an electric vehicle – including buying one of the 20,000 used Tesla Model 3 EVs being dumped by Hertz.
ecoXplorer Evelyn Kanter is a journalist with 20+ years of experience as a newspaper and magazine writer, radio & TV news producer & reporter, and author of guidebooks and smartphone apps – all focusing on travel, automotive, the environment and your rights as a consumer.
ecoXplorer Evelyn Kanter currently serves as President of the International Motor Press Assn. (IMPA), a former Board Member of the Society of American Travel Writers (SATW) and a current member of the North American Travel Journalists Assn. (NATJA) and the North American Snowsports Journalists Assn. (NASJA).
Contact me at evelyn@ecoxplorer.com.
Copyright (C) Evelyn Kanter
What do you think? We value your comments and love hearing from you.