Rental car giant Hertz is significantly expanding its electric vehicle sale-off program to combat rising EV depreciation costs, with used Tesla Model 3s now available for less than $20,000 It has become. Hertz's big investment in Tesla EVs turned into a disaster, causing huge losses and the CEO's job loss.
Inside the EV report Hertz's ambitious electric vehicle program has hit another major roadblock, with the company reporting an 89% increase in EV depreciation costs to $537 per month per vehicle. The rental car company has pledged to sell 30,000 electric vehicles in its fleet by the end of 2024, a major shift from its previous EV introduction strategy.
The company's current woes stem from its bold 2021 initiative to “go green,” which includes plans to buy 100,000 Tesla Model 3s. While this initial vision seemed promising, with benefits such as reduced maintenance costs and strong customer interest, the strategy subsequently faced a number of challenges that forced a significant course correction.
The main reason for Hertz's EV difficulties is Tesla's repeated price cuts, which have seriously affected the residual value of its rental vehicles. These price cuts had a ripple effect across the used EV market, leading to accelerated depreciation of Hertz's electric vehicle assets. The company currently offers used Tesla Model 3s for under $20,000, with additional savings available through the $4,000 federal tax credit available on used EVs.
The financial impact was significant. Beyond depreciation, Hertz discovered that its Tesla vehicles were not achieving the expected cost savings. Repair costs are higher than expected, and the company is experiencing a higher than expected crash rate with Tesla vehicles, resulting in significant repair costs and extended repair times.
These combined factors led to multiple quarters of losses and resulted in the resignation of CEO Stephen Shah earlier this year.
Financial nightmares have prompted Hertz's new leadership to begin a major sale of its electric vehicles. The company plans to maintain only enough electric vehicles to meet customers' actual demand for EV rentals, significantly reducing its initial electric mobility ambitions.
The divestment program will continue until 2025, with the company looking to minimize losses as the value of used EVs continues to fall. Current market prices for these vehicles appear to be stable between $20,000 and $25,000, providing some predictability for the company's loss mitigation efforts.
read more This is the inside of the EV.
Lucas Nolan is a reporter for Breitbart News covering free speech and online censorship issues.
