Summary
- Hertz revealed an aggressive plan to sell its inventory of Tesla electric vehicles due to financial losses
- Hertz bought 100,000 EVs from Tesla in 2021, but mismanagement and depreciation led to losses
- Hertz had to scale back the number of EVs for rent due to Tesla cutting prices and increased depreciation
- Former CEO lost his job due to losses from EV fleet and $195 charge for vehicle depreciation in Q1
- Hertz plans to sell tens of thousands of Teslas this year, with the overhaul expected to be complete by the end of next year in an effort to normalize monthly depreciation
Article
In 2021, Hertz announced plans to purchase 100,000 electric vehicles from Tesla, boosting the EV maker’s stock and market cap. However, mismanagement of the Tesla fleet led to financial losses for Hertz. When Tesla started cutting prices, the value of Hertz’s EV fleet was negatively impacted, prompting the company to scale back its rental offerings and sell some vehicles for around $25,000. Former CEO Stephen Scherr lost his job in the midst of these challenges, and the losses continued even after his departure, with significant charges incurred for vehicle depreciation in the first quarter of the following year.
Hertz’s struggles with its EV fleet continued into the second quarter, with the company reporting a significant loss per share and higher depreciation costs than the previous year. Hertz is now focused on improving its management of the vehicle fleet and implementing more efficient business practices to address the ongoing losses. As part of this effort, the company plans to sell “tens of thousands” of Teslas this year and complete the fleet overhaul by the end of next year. Once the overhaul is finished, Hertz expects monthly depreciation costs to return to a more manageable level.
Despite these efforts, Hertz shares have declined by 60 percent this year, reflecting investor concerns about the company’s financial performance and future prospects. The rental company’s aggressive plan to sell off its Tesla EVs is seen as a necessary step to reduce losses and stabilize its operations. With new CEO Gil West at the helm, Hertz is optimistic that better management practices and a more streamlined business approach will help reverse the negative trend in its financials. The company is committed to completing the fleet overhaul and returning to a more sustainable operational model in the coming months.
As Hertz navigates its challenges with its EV fleet, industry observers are closely monitoring the company’s progress and efforts to improve its financial performance. The rental company’s decision to sell a large number of Tesla vehicles reflects the impact of mismanagement and depreciation issues on its bottom line. With a new CEO in place and a clear strategy to address these issues, Hertz is working towards a more stable and profitable future. Investors and analysts will be watching closely to see if the company’s efforts to offload its EV inventory and revamp its fleet management will result in a turnaround in its financial fortunes.
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