Hertz earnings hit by wariness over EVs
Hertz reported some rough earnings Tuesday. Revenue was down 3.8% from the same time last year, and it had to write down the value of its fleet by $1 billion. That is largely because of a bet the company made that it would be a good idea to buy thousands of Teslas a few years ago.
Jessica Lipsky is a media professional who travels a lot for work and rents a lot of cars. And every time, she has a choice: rent an electric vehicle or gas?
“I choose gas,” Lipsky said. She wants to want to choose electric, but doesn’t. “I wouldn’t really know the process of, like, how to charge an electric vehicle, where I should go, how much is that going to cost?”
People will do this research if they are going to buy an electric car, but renting? The technical term for all that is a hassle.
“It definitely feels like a logistics challenge when I have other things to worry about,” Lipsky said.
This was one of the big challenges Hertz ran into when it decided to buy an estimated 35,000 Teslas to rent out a few years ago. It’s been offloading thousands of them since.
“As of now, Teslas are about 3% of the total fleet,” said Eugene Belostotsky with Citigroup. “It was closer to 10% at the peak.”
And as it offloaded these cars, Hertz collided with another problem, said Alan Baum, head of market research firm Baum and Associates.
“Tesla reduced the sales price of their retail cars, which obviously reduced the value of those vehicles for Hertz and put them in a very bad position,” Baum said.
But according to Citigroup analysis, the hemorrhage has stabilized, and Hertz is at a more sustainable level of electric vehicles. And for all of Hertz’s problems renting EV’s, people are still interested in buying them, according to David Greene, an auto industry analyst with Cars.com.
“We’re seeing strong demand growth, particularly in used EVs,” Greene said.
And some of those used EVs may have been previously owned by Hertz.
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