"Our in-fleeting of EVs will be slower than our prior expectations," Hertz CEO Stephen Scherr said on the company's Q3 earnings call.
Last week, General Motors and Ford announced they are pushing back spending on electric vehicles, citing slowing demand for BEVs and the EV price war initiated by Tesla at the start of the year.
But it looks like Detroit’s biggest automakers aren’t the only ones adopting a more cautious approach to EVs. Hertz executives were downbeat on electric vehicles as well on the company’s Q3 earnings call, announcing that the rental car giant is slowing down the pace by which it adds EVs to its fleet.
Two years ago, Hertz pledged to order 100,000 Tesla EVs by the end of 2022. The company now has around 35,000 Tesla vehicles in its fleet – far shy of its original target. And judging by what was said on the third-quarter earnings call, Hertz doesn’t plan to hit that target too soon. CEO Stephen Scherr said, “our in-fleeting of EVs will be slower than our prior expectations.”
The rental car company posted lower-than-expected margins for the previous quarter, and Scherr said EV repairs and Tesla price cuts affecting the resale value of Hertz’s EVs by about one-third were the two main causes.
Gallery: Hertz EV Fleet
“MSRP declines in EVs over the course of 2023, driven primarily by Tesla, have driven the fair market value of our EVs lower as compared to last year, such that as salvage creates a larger loss and therefore greater burden,” the CEO said according to CNBC.
“On a unit basis, we achieved productivity gains across most categories of auto. The exception remained vehicle damage costs, particularly those on our EVs,” he added.
That said, Hertz’s CEO said the company is still “committed” to buying 100,000 cars from Tesla and 175,000 EVs from GM, but is not on target to have EVs make up a quarter of its fleet by the end of 2024 anymore as previously hoped.
He noted that Hertz is working with Tesla to assess the performance of the car “so as to lower the risk of incidents of damage.” As Hertz purchases more EVs from GM and other automakers, it expects those vehicles to have a “lower incidence of damage” and “a lower cost of parts and labor,” Scherr said.
The rental car company disclosed that about 80 percent of the EVs in its fleet are Teslas at the moment, with EVs making up about 11 percent of its entire fleet. Since Hertz has around 50,000 EVs in its fleet currently, it means about 35,000 of them are Teslas.
Source: CNBC
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Keyword: Hertz Slows Down EV Plans As Tesla Price Cuts, Repair Costs Affect Profits