Due to low demand and high repair costs for its battery-powered choices, Hertz Global Holdings plans to sell a third of its US electric vehicle fleet and reinvest in gasoline-powered vehicles.
The rental giant stated in a regulatory statement yesterday that sales of 20,000 EVs started last month and will continue through 2024. Hertz plans to report a non-cash charge for incremental net depreciation expense in its fourth-quarter results, totaling about $245 million (€223.7 million).
Hertz Global Holdings will reinvest in gas-powered vehicles after starting to sell electric vehicles from its US fleet.
Hertz and Tesla’s stock fell on Thursday after the car-rental company backed off from its drive toward electric vehicles.
Hertz announced that it will purchase more cars with internal combustion engines and offer roughly 20,000 electric vehicles.
For its rental fleet, Hertz placed an order for 100,000 Teslas in 2021, but demand has since declined.
Hertz, a car rental firm, announced on Thursday that it will sell about one-third of its fleet of electric vehicles, causing shares of both Tesla and the company to plunge.
Citing sluggish EV demand, Hertz said in a regulatory filing it would utilize the sale profits from off loading 20,000 EVs to purchase internal-combustion-engine cars.
Tesla’s stock dropped by 2.94%, while Hertz Global Holdings had a 4.28% dip.
With this news, Hertz has taken a major step back from its former target of electrifying 25% of its fleet by the end of the year.
According to the statement, the company will continue to sell EVs but will concentrate on balancing supply and demand for cars. In the meantime, Tesla’s pricing reductions have reduced the value of Hertz’s fleet, and the company has had to contend with increased maintenance costs for its electric cars.
The sale will result in an additional $254 million in net depreciation expense for Hertz, and the sales are anticipated to be completed by 2025.
In 2021, the business placed an order for 100,000 Tesla vehicles, extending its ambitious electrification wager. It was the biggest EV purchase ever made at the time.
Hertz was a party to an agreement with the Corporate Electric Vehicle Alliance that sought to enable the purchase of at least 330,000 EVs by 2027, along with companies including Amazon, Best Buy, and DHL.
Tesla, on the other hand, just started shipping its Cybertruck and updated its Model 3 for the first time in many years. But BYD, a Chinese automaker, recently surpassed Tesla to become the world’s largest seller of electric vehicles.
