Hertz is planning to sell 20,000 used electric cars, including Teslas, at a lower price than what it originally paid for them, as owning and renting out these vehicles has proven to be more expensive than anticipated. This decision is unexpected as Hertz had previously stated its intention to purchase 100,000 Teslas less than three years ago.
At the time of writing, Hertz had around 684 electric vehicles available for purchase, with approximately 640 of them being Teslas priced between $20,125 and $40,886.
While the prices of used electric vehicles (EVs) may seem appealing compared to the cost of a new Tesla Model 3, which is valued at around $38,000, there are risks involved in purchasing a used EV. These risks include expensive repairs and the deterioration of the battery over time.
During an interview, Hertz CEO Stephen Scherr stated that the rental agency will be selling a significant number of its electric vehicle (EV) fleet until 2024 due to the ongoing high costs associated with EVs. He’s not wrong there: as the research commissioned by Solera Holdings found that it is still more costly to repair an electric car compared to a internal combustion engine (ICE) car. When considering this cost difference for a large number of cars, the financial implications of choosing an electric car become evident.
Hertz acknowledged that it might utilize funds generated from selling electric vehicles to reinvest in traditional gas-guzzling cars, which are more harmful to the environment but more profitable for the company. The company seems to have realized that people in the rental market prefer conventional gas-powered cars over electric vehicles.
That said, the rental agency is eyeing GM’s plan to start selling cheaper EVs — which is back to the drawing table after the company and Honda kiboshed it in fall 2023 — in an effort to make renting out electric cars profitable.
Reference- The Verge, Business Insider, Bloomberg, Business Wire, Hertz website, Solera Holdings Research