Hertz is hitting the brakes on its ambitious electric vehicle plans. The rental car company announced this week that it has sold around 20,000 EVs from its US fleet, representing about a third of its EVs globally. Hertz cited high expenses from collisions and repairs, especially for EVs, as the reason for offloading part of its EV inventory.
The company now intends to reinvest some of the sale proceeds into new gas-powered vehicles instead. As Hertz said in a regulatory filing, this move will “better balance supply against expected demand of EVs” and “position the company to eliminate a disproportionate number of lower margin rentals and reduce damage expense associated with EVs.”
It’s a remarkable about-face for Hertz, which made headlines in 2021 when it publicized a massive deal for 100,000 Teslas to electrify its rental fleet. Just last year, Hertz doubled down on EVs by signing a separate agreement with Polestar for up to 65,000 electric cars over five years.
But the rapid EV pivot seems to have backfired. In October 2022, Hertz CEO Stephen Scherr admitted that EVs were costing the company twice as much in repairs compared to gas-powered cars after collisions and damage. As demand for rentals slowed amid broader economic uncertainty, the influx of pricier EVs strained Hertz’s bottom line.
Industry observers note that the pullback coincides with a flooded market for pre-owned EVs, especially Teslas. With Hertz and other companies selling off EVs, Tesla itself is offering more than 700 pre-owned vehicles on its website – the majority being Model 3s and Model Ys.
The car rental giant that once acts as a high-profile cheerleader for an imminent EV future is now pumping the brakes and returning to tried-and-true gas vehicles. For Hertz, at least, the road to an all-electric fleet has turned out to be a bumpier ride than anticipated. But with EVs still in their early adoption phase, Hertz’s pivot may signal similar rationalizations across the auto industry as the hype gives way to hardcore economics.
