Hertz has announced it will sell approximately 20,000 electric vehicles (EVs) from its US rental car fleet, buying more combustion-powered vehicles instead.
The company began offloading its EVs in December 2023 and is planning to continue selling its vehicles in an “orderly fashion” throughout 2024.
“The Company’s decision to reduce its EV fleet will result in the recognition, during the fourth quarter of 2023, of approximately $245 million [A$365 million] of incremental net depreciation expense related to the sale,” the company said in a regulatory filing.
“Expenses related to collision and damage, primarily associated with EVs, remained high in the quarter, thereby supporting the Company’s decision to initiate the material reduction in the EV fleet.
“The Company expects to reinvest a portion of the proceeds from the sale of EVs into the purchase of internal combustion engine (“ICE”) vehicles to meet customer demand.”
The vehicles on the chopping block will continue their rental duties until they find a new home.
Hertz announced in October 2023 it was rolling back its ambitious electric car plans for the United States.
In 2021 the company announced it planned to order 100,000 Tesla EVs by the end of 2022, however based on a report by CNBC, the company’s US fleet as of October 2023 consisted of 50,000 electric cars and only 35,000 Teslas.
EVs accounted for around 11 per cent of Hertz’s entire global fleet as of October 2023, far short of its previously stated goal of a 25 per cent share by the end of 2024.
Hertz Global CEO Stephen Scherr said during the company’s third-quarter earnings call in 2023 that “our in-fleeting of EVs will be slower than our prior expectations”.
“Collision and damage repairs on an EV can often run about twice that associated with a comparable combustion engine vehicle,” said Mr Scherr on the call.
Mr Scherr added another reason why Hertz is slowing down its electrification rollout is due to recent price cuts.
“The MSRP declines in EVs over the course of 2023, driven primarily by Tesla, have driven the fair market value of our EVs lower as compared to last year, such that as salvage creates a larger loss and therefore greater burden,” said Mr Scherr.
While Hertz is moving away from EVs, Americans are buying them in record numbers.
Based on a report by Cox Automotive, there were 1,189,051 new EVs sold in the United States in 2023. EV market share in the US was up from 5.9 per cent in 2022 to 7.6 per cent in 2023.
The fourth quarter of 2023 saw 317,168 EV sales and 8.1 per cent market share in the US.
We’ve contacted Hertz Australia to confirm if it will follow its US counterpart in moving away from EVs.