Rental car giant confirms it’s selling off 30k EVs after $392 million loss proves maintenance costs too high
HERTZ rental car company has revealed that it‘s reducing its collection of EVs after realizing expensive costs for electric models.
Hertz will reduce its selection of EVs by an additional 10,000 vehicles than it planned, selling off 30,000 electric automobiles this year.
The rental car company planned to buy around 100,000 Teslas during the pandemic in hopes of increasing people’s traveling habits in 2021, Auto Week reported.
The 30,000 EVs it will now be getting rid of is 10,000 more than Hertz initially planned.
The rental car company reported a loss nearly three times worse than analysts expected, Bloomberg reported.
That’s about one-third of the company’s electric vehicle fleet.
More on electric vehicles
The company said that it lost $1.28 a share contrary to analyst expectations for a loss of 44 cents a share.
The company is selling the cars as a part of its EV downsizing after lots of its cars plummeted in value.
Hertz cited high repair costs and weak demand from its customers in connection to its decision.
Now the rental company is quickly trying to get rid of EVs after a series of major losses.
“The company incurred a $195 million charge to vehicle depreciation to write down the EVs held for sale,” the rental car giant said in a filing.
“Which were remaining in inventory at quarter-end to fair value and recognize the disposition losses on EVs sold in the period.”
The EV charging experience has raised some issues on the consumer side of things.
Because of the combination of EV problems for Hertz and EV drivers, the rental car business suffered a loss of $392 million in its first quarter.
While Hertz normally makes money by selling its used rental cars after they accumulate a certain mileage, the same has not been true for used EVs.
The company just recently parted ways with CEO Steven Scherr in March.
His resignation was connected to the EV gamble failing to pay off despite seeming promising a couple of years ago.
The uncertainty surrounding whether EVs are taking off as Elon Musk has predicted in the past could mean a good thing for people who’ve been avoiding buying one because of cost.
HERTZ EV Losses
The rental car company reported a loss nearly three times worse than analysts expected connected to EVs.
- The company is selling the cars as a part of its EV downsizing after lots of its cars plummeted in value.
- Hertz cited high repair costs and weak demand from its customers in connection to its decision.
- Hertz lost $1.28 a share.
- That’s $392 million total.
- Hertz said its monthly depreciation costs soared to $592 per vehicle.
- The company’s direct EV operating expenses rose 3 percent to $1.4 billion.
- Hertz parted ways with CEO Steven Scherr in connection to the EV gamble failing to pay off.
- As of last month, revenue per day fell 7 percent
- Vehicle utilization dropped fell slightly to 76 percent – while rental companies like to be at 80 percent or better.
Back in 2019, Musk made a surprising claim about Tesla vehicles.
He announced that the electric vehicles would go up in value, not down, after purchase but the opposite is happening, according to CNN.
Buying a used EV can be a good value if you are already a fan of EVs though the Hertz situation could give you pause.
With Hertz selling a good amount of its electric vehicle fleet, that emphasizes the growing pains in the market for electric vehicles meaning used EVs might get cheaper.
Many used EVs qualify for a tax credit of up to $4,000 that you can get at the dealership as an instant rebate, according to personal finance enthusiasts with The Ascent.
The value drop can be bad news for people who already purchased higher-priced new EVs because their automobiles could depreciate faster than expected.
Despite that, more used EVs on the market can be good news for electric vehicle buyers.
The U.S. Sun has reached out to Hertz for comment.
