Going green Hertz: Rental giant axes third of EV fleet over lack of demand
Company expects $245 million hit due to depreciation
Rental giant Hertz is backing away from electric vehicles (EVs) and plans to sell off a third of its global fleet of battery-powered cars.
Approximately 20,000 EVs are to be offloaded from its US fleet throughout 2024, and the company plans to spend at least a portion of the proceeds buying internal combustion engine (ICE) vehicles "to meet customer demand."
The decision was revealed in a filing made with the US Securities and Exchange Commission (SEC) [PDF] and reflects low demand from customers coupled with lower margin rentals and "damage expense associated with EVs."
Hertz expects to take a hit to the tune of $245 million due to incremental net depreciation expense related to the sale.
While Hertz emphasized plans to improve profitability of the remaining EV fleet, with initiatives including expanding EV charging infrastructure and making deals with manufacturers around access and parts and labor, it's hard to see the decision as anything other than an abrupt about-face by a company that a mere two years ago amplified its intent to buy 100,000 cars from Tesla, along with thousands more from other EV makers.
It seems likely that Tesla's recent price cuts have resulted in alarming levels of depreciation, which, combined with the cost of fixing the vehicles, have played a part in Hertz's decision. That, and the fact the buyers have been staying away from EVs in their droves, according to an open letter from thousands of US auto dealers.
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Lack of demand could also be attributed to concerns regarding the US's charging infrastructure. Range anxiety continues to represent a barrier, and although the US Biden-Harris administration announced $623 million in grants to build out a charging network, the goal of at least 500,000 publicly available chargers is only scheduled for 2030 and will do little to assuage current worries.
According to the Office of Energy and Renewable Energy, there are only 140,000 publicly available chargers in the US.
The Register asked Hertz for more detail on the reasons behind its decision and will update should the company respond.
The US is not alone in encountering bumps on the road to EV adoption. According to the UK's Society of Motor Manufacturers and Traders (SMMT), while sales volume of battery electric vehicles (BEVs) reached record highs, their market share has slipped slightly to 16.5 per cent.
SMMT observed that although the market share for BEVs had dipped a little, UK sales of mild hybrid electric vehicles (MEVs) and plug-in hybrid electric vehicles (PHEVs) were surging. It is also worth noting that SMMT recorded a larger drop in the market share of petrol and diesel vehicles.
As the law stands today, all new cars bought in the UK must be zero emission by 2035. ®