Summary
– Hertz’s investment in building the largest electric vehicle rental fleet in North America in 2021 backfired, resulting in massive losses
– The company is increasing the amount of EVs it plans to sell privately this year by 10,000 units, aiming for a goal of 30,000 EVs sold in 2024
– Depreciation costs of EVs led to significant financial losses for Hertz, with adjusted earnings before interest, taxes, depreciation, and amortization resulting in $567 million in quarterly losses
– Hertz’s retreat from its aggressive EV plans makes sense financially despite increased travel and competition from rideshare companies
– Hertz’s losses can benefit consumers looking for affordable EVs, with many models available for sale at reasonable prices and relatively low miles
Article
**The Rise and Fall of Hertz’s Electric Vehicle Rental Fleet**
In 2021, Hertz made a bold move to invest in building the largest electric vehicle rental fleet in North America, featuring EVs from top manufacturers such as Tesla, General Motors, and Kia. However, a series of unfortunate events, including rapid EV price cuts in 2023 leading to massive depreciation and higher repair costs, have caused major losses for the rental giant. As a result, Hertz has been offloading its EVs at fire-sale prices and undergone changes in leadership.
**Challenges in the Electric Rental Market**
Despite initial optimism, Hertz’s transition to an all-electric fleet has been labeled a “catastrophe,” prompting the company to increase its goal of selling EVs privately by 10,000 units in 2024. The financial statement for the first quarter revealed a $195 million charge to vehicle depreciation due to remaining EV inventory at quarter-end and disposition losses on EVs sold. Depreciation costs have increased by $339 per vehicle, with $119 related to EVs held for sale, leading to significant financial losses for the company.
**Market Dynamics and Financial Implications for Hertz**
While the rental car business continues to thrive post-pandemic, Hertz’s adjusted earnings before interest, taxes, depreciation, and amortization resulted in $567 million in quarterly losses, largely attributed to huge depreciation costs, a third of which were due to EVs. Last year’s round of constant EV price cuts and discounts, coupled with higher repair costs and difficulty sourcing parts, have posed challenges for companies like Hertz that rely on a constant churn of vehicles in their fleets.
**Opportunities for Consumers**
Despite the setbacks faced by Hertz, consumers can benefit from the rental giant’s woes by purchasing discounted EVs from their dedicated portal. Models such as the 2023 Chevrolet Bolt EVs, Kia EV6s, Mercedes EQBs, and Tesla Model 3s are available at reasonable prices with relatively low mileage. With the expectation that EV rentals will eventually become more widespread in the future, purchasing a retired rental car could be an affordable way for individuals to transition from gasoline-powered vehicles.
**Conclusion and Future Outlook**
While Hertz’s experience with EV rentals may have been tumultuous, it serves as a learning opportunity for the industry and consumers alike. By navigating challenges such as depreciation, repair costs, and inventory management, companies can potentially optimize their electric vehicle offerings. As the market continues to evolve, there is the potential for increased adoption of EVs in rental fleets, offering consumers more sustainable transportation options. In the meantime, bargain-hunters can take advantage of discounted EVs from Hertz to make the switch away from traditional gasoline vehicles.
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