Hertz trims EV fleet due to high repair costs, reinvests in gas-powered vehicles

Hertz Global Holdings announced Thursday that it plans to trim its electric vehicle fleet, citing high repair costs, and reinvest in gas-powered vehicles.

In Hertz’s regulatory filing on Thursday, the company stated that it will sell 20,000 EVs. The announcement comes after the car rental firm committed to making 25% of its fleet electric by the end of 2024. The company has since pulled back on that goal. It also previously agreed to purchase 100,000 Teslas by the end of 2022 and 65,000 Polestar vehicles over the next five years.

Approximately 80% of the car rental firm’s EV fleet are Tesla vehicles, and Hertz plans to sell some of those vehicles. Its used car website lists over 700 EVs for sale, including Tesla Model 3 and Model Y vehicles, BMW’s i3, and Chevrolet’s Bolt, the New York Post reported. The funds from the sales, which should be complete by 2025, will be used to purchase more gas-powered cars.

The company claimed that the collision and damage repair costs associated with EVs are more significant than with gas-powered vehicles. In a recent Securities and Exchange Commission filing, Hertz wrote, “Expenses related to collision and damage, primarily associated with EVs, remained high in the quarter.”

During a recent analyst call, Hertz CEO Stephen Scherr stated, “[C]ollision and damage repairs on an EV can often run about twice that associated with a comparable combustion engine vehicle.”

“Remember, in the likes of GM and other [automakers], there’s decades of establishment of a broad national parts supply network,” Scherr continued. “There’s an aftermarket of parts that is there, that is less mature, obviously, in the context of Tesla.”

He noted that Hertz is in “very direct engagement” with Tesla regarding parts procurement.

“The 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 a salvage creates a larger loss and, therefore, greater burden,” Scherr said.

Hertz anticipates roughly $245 million of incremental depreciation expenses from the EV sales in the fourth quarter of 2023.

The company noted that it will still offer EVs to its customers as it works to increase the fleet’s profitability.

According to Kelley Blue Book, Americans purchased nearly 1.2 million EVs in 2023, making up 7.6% of all new vehicle sales.

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