As the information about Hertz’s sale of previously rentable Teslas spreads through the media, the rental company has also announced a shift towards traditional gas-powered vehicles in the near future. Hertz states that it is “rebalancing” its fleet numbers by selling off a third of its EV fleet and replacing those cars with ICE models.
According to Automotive News, Hertz aims to sell off 20,000 cars from its EV stock, a process that commenced as early as last month. The proceeds from the EV fleet sales will be reinvested to meet the demand for rental ICE vehicles. This recent decision follows Hertz’s October announcement of scaling back its EV operations, citing high repair costs and reduced residual value compared to its other vehicles as reasons for the setbacks.
Some critics argue that Hertz is now facing the consequences of overinvesting in an unproven, unready, and unwanted technology by overbuying a fleet of EVs. But is that really the case?
While there has been a softer growth in demand for EVs lately, this information may not be entirely relevant to Hertz’s issues. Hertz confirmed that 80% of its EVs are Teslas, and it is uncertain whether the challenges with EV rentals stem specifically from the nature of EVs or from issues tied to Tesla vehicles.
Hertz has cited high damage and collision costs for its EV rentals. Given Tesla’s higher-than-average insurance costs and lengthy repair times, these challenges appear to be more Tesla-related than general EV problems. (Hertz has not commented on this to InsideEVs.)
Furthermore, the reintroduction of the $7,500 new EV tax credit meant that Tesla Model 3 and Model Y vehicles became significantly cheaper and subsequently impacted their resale value. Although other automakers might have also lowered prices, none did so as extensively as Tesla, causing rental companies and Tesla owners to experience diminished resale values.
Nevertheless, this appears to be more of a Tesla-specific issue rather than a widespread EV challenge. While Hertz is opting away from Teslas, other car companies still plan to electrify their rental fleets.
It’s also worth noting that rental car companies have faced difficulties in providing adequate EV experiences and education for consumers. However, a reduction in the EV fleet does not signify its complete elimination. Hopefully, Hertz has learned from this experience and will introduce a more efficient and streamlined EV rental service.
On the bright side, the removal of 20,000 EVs from Hertz’s fleets may lead to an influx of used EV deals in the coming year, with the potential for three-year-old Teslas to be sold at affordable prices.