In an electric twist of fate, Hertz is putting the brakes on its once ambitious EV initiative, citing the vehicles as both unreliable and pricier to maintain compared to their gas-powered counterparts. The Estero, Florida-based rental giant announced a steeper cut to its electric fleet, planning to offload an additional 10,000 electric vehicles. This decision escalates the total number of EVs Hertz intends to sell in 2024 to 30,000, following a costly $195 million charge in the first quarter due to fleet depreciation.
This financial pothole deepened with a $245 million write-down in the last quarter, steering the company’s losses on its electric endeavor to a hefty $440 million. This misadventure in electrification began under the tenure of former CEO Stephen Sherr and has continued to jolt the company’s finances.
“Fleet and direct operating costs weighed on this quarter’s performance,” CEO Gil West, who recently took the wheel at Hertz on April 1, explained. His background spans stints at Delta and General Motors’ Cruise unit. West is steering efforts towards optimizing vehicle supply and slashing operating costs to drive the company back to profitability.
Market reactions were chilly, with Hertz stock skidding down over 3% in Friday morning trading. The stock’s year-to-date plummet of nearly 56% has deflated its market value to a modest $1.38 billion.
Beyond the balance sheets, the firm’s push into EVs has proven cumbersome for consumers too. Many renters, despite their unfamiliarity with the nuances of charging and operating EVs, opted for them due to availability, leading to a less than charged customer experience. This revelation came from West during an earnings call with analysts.
Hertz’s road to an electric fleet included high-profile deals such as a commitment to purchase 100,000 Teslas and agreements with Polestar, alongside a partnership with Uber to electrify the rideshare’s offerings. The aim was to convert a quarter of its fleet to electric by the end of 2024.
However, the strategy hit a speed bump as Tesla’s strategy of slashing prices to boost sales unexpectedly accelerated the depreciation of Hertz’s EV fleet. Moreover, maintenance costs for Teslas were reportedly double those of their gasoline counterparts, further draining the economic battery of Hertz’s electric dream.