Hertz is facing unexpected challenges as it looks to electrify more of its rental fleet. Brandon Bell/Getty Images
Hertz is slowing down its plans to add more electric cars to its fleet.
The company explained that electric cars have higher repair costs and have depreciated significantly.
Hertz had announced that it would buy around 100,000 Teslas by 2021.
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Die Introduction of electric cars turns out to be much more complicated than Hertz expected.
The car rental giant is slowing down its far-reaching plan to integrate more electric vehicles into its fleet. The reason: challenges such as high repair costs and depreciation. Hertz is not completely abandoning the use of electric cars, but is proceeding carefully.
“The introduction of electric vehicles into our fleet will be slower than we expected,” Hertz CEO Stephen Scherr said during the third quarter conference call on Thursday. “We are aware of the challenges and are working to eliminate them – which we can.”
Hertz originally set a goal of having 25 percent of its fleet electric by the end of 2024. Now that goal is dropped. Today, 11 percent of Hertz’s vehicles are electric, and 80 percent of those are Teslas.
Tesla’s flurry of price cuts isn’t ideal for Hertz either
From 2021, Hertz was fully committed to electric cars and canceled one Plan to purchase 100,000 Teslas to offer customers electrical options. Hertz also has contracts with General Motors (to purchase 175,000 vehicles), which EV-Brand Polestar (to purchase 65,000 vehicles) and Uber (to provide EVs to drivers). But things weren’t easy.
Rideshare drivers caused more damage to Hertz’s electric vehicles than expected, prompting the company to add more electric vehicles to its regular rental fleet. That led to an oversupply that depressed daily vehicle sales over the course of the quarter, Scherr said.
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Additionally, Hertz has found that repairing damage to an electric car can cost about twice as much as fixing similar problems on a comparable internal combustion engine vehicle. Routine maintenance, on the other hand, costs less, says Scherr. (Electric cars do not require oil changes and are generally easier to maintain than internal combustion vehicles)
Teslas Flood of price cuts in recent times Year hasn’t exactly done Hertz any favors either. Remember: When Hertz made its Tesla announcement, Elon Musk spoke up and said he would not offer a volume discount.
“The MSRP declines in EVs throughout 2023, driven primarily by Tesla, have reduced the market value of our EVs compared to last year, making a salvage a greater loss and therefore a greater burden,” said Scherr.
The electric car industry has had a difficult time due to high interest rates
Adding it all up, Hertz’s third-quarter profit would have been “several margin points higher” had its fleet been similar in size but not included EVs, Scherr said. “Nevertheless, we remain committed to our long-term strategy to electrify the fleet,” he added.
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Hertz isn’t the only company slowing down the use of electric vehicles. After years of exponential sales growth and seemingly limitless demand, the A difficult time for the electric car industry behind.
This year they are Electric cars in the dealer parking lots and force the car manufacturers to reduce prices and create further incentives. High interest rates have made the already expensive electric models even more unaffordable. Manufacturers such as Ford and General Motors – once extremely optimistic about the future of electric mobility – have said they are expanding their Limit spending on electric cars and the production of electric cars will increase more slowly.
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