Hertz is off-loading an additional 10,000 electric vehicles from its fleet because of depreciation. This comes just a few months after it started to sell 20,000 EVs, primarily Teslas.
In 2021, the car rental giant emerged from a brief bankruptcy and reached a deal with Tesla to purchase 100,000 vehicles for its fleet. However, aggressive price cuts initiated by Tesla throughout 2023 destabilized the used market, resulting in huge depreciation of its used vehicles. Other car manufacturers also announced price cuts for their EVs, further contributing to the accelerated depreciation.
Read: Hertz Now Pauses Polestar EV Purchases Following Tesla Fleet Sell-Off
In a recent financial filing, Hertz said vehicle depreciation of its fleet has jumped $588 million this year compared to a year prior, Autoweek reports. This contributed to a $392 million loss in the first quarter of 2024, even though the company reported a 2% growth in revenue.
“Fleet and direct operating costs weighed on this quarter’s performance,” Hertz chief executive Gil West said. “We’re tackling both issues—getting to the right supply of vehicles at an acceptable capital cost while at the same time driving productivity up and operating costs down.”
Ordinarily, Hertz can make money by selling its used rental cars after they hit a certain mileage. The depreciation of used Tesla EVs has made this impossible.
In March, Stephen Scheer stepped down as Hertz’s chief executive after the company’s bet on EVs failed to pay off. His stint as the head of the company came after ex-Ford chief executive Mark Fields led Hertz for six months and was the mastermind behind the decision to buy 100,000 Teslas. The company’s current CEO, Gil West, is the former chief operating officer at Cruise.
