Hertz, the vehicle rental company, has surprised by putting 20,000 electric cars from its fleet in the United States on sale. This measure marks a radical change in the company's strategy, which had initially bet heavily on electric mobility in 2021, signing agreements with Tesla for the acquisition of 100,000 units of the Model 3 and later with Polestar.
The initial commitment of the company founded in Chicago by Walter L. Jacobs to electric cars occurred after overcoming a critical financial situation in 2020, when it declared bankruptcy. Now it is once again an economic reason that has motivated Hertz to return to combustion engine vehicles. This decision has not only generated a negative reaction in the markets but has also called into question the short-term viability of electric mobility in the car rental sector.
The main reason given by Hertz for backing down on its commitment to electric cars is the growing perception that they generate too many costs in terms of collisions and damages. Although theory supports the idea that these vehicles can offset the initial outlay with later savings in energy and maintenance, Hertz maintains that insurance companies tend to declare more total claims on electric vehicles due to the greater complexity and costs associated with repairs, especially in the case of Tesla models.
Hertz originally aimed for 25% of its fleet to be electric by the end of this year. However, before reaching this decision, the company had already taken measures such as limiting the torque and speed of electric vehicles, after some users had head-on collisions.
The reaction in the markets has not been long in coming and Hertz shares have experienced a drop of 4%, and Tesla's shares have fallen 3%. Additionally, the car rental company is expected to record charges of approximately $245 million related to depreciation costs from the sale of electric vehicles during the fourth quarter of 2023.
Second-hand market experts indicate that the decision made by Hertz will contribute to the downward trend in the values of used electric vehicles, despite the fact that the figure of 20,000 cars does not represent a significant percentage of the total used vehicle market.
In an interview on CNBC, Hertz CEO Stephen Scherr spoke about the volume of electric vehicle sales, which only increased by 1.3% in the last quarter of 2023. “It is not at the level of demand that we anticipated” , said. “We may have gotten ahead of ourselves,” he added.
By selling electric vehicles to buy gasoline-powered vehicles, “the company hopes that this action will better balance supply with the expected demand for electric vehicles,” Hertz said.
