Rental firm Hertz Global Holdings┬аsaid on Thursday it would sell about 20,000 electric┬аvehicles, including Teslas, from its U.S. fleet due to higher┬аexpenses related to collision and damage, and will opt for┬аgas-powered vehicles.
Shares of the rental company, which also operates vehicles from┬аSwedish EV maker Polestar among others, fell about four┬аper cent. Tesla’s┬аstock was down about three per cent.
Hertz also expects to record┬аabout $245 million US in costs┬аrelated to depreciation expenses from the proposed sale of the electric vehicles┬аin┬аthe fourth quarter of 2023.
CBC News has reached out to Hertz for clarification on whether Canadian vehicle fleets will be affected or included in these fleet changes.
Hertz’s decision underscores the bumpy road EVs have hit┬аas the growth rate on sales of those vehicles has slowed. This has also resulted in┬аcarmakers such as┬аGeneral Motors or Ford to┬аscale back production plans of those vehicles.
Morgan Stanley analyst Adam Jonas in a note said the car┬аrental firm’s move was a warning across the EV space and it was┬аanother sign that EV expectations need to be “reset downward┬аacross the market.”
“While consumers enjoy the driving experience and fuel┬аsavings (per mile) of an EV, there are other ‘hidden’ costs to┬аEV ownership,” Jonas added.
Hertz had said it would order 100,000 Tesla vehicles by the┬аend of 2022 and followed that with a decision to buy up to┬а65,000 units over five years from Polestar.
“Expenses related to collision and damage, primarily┬аassociated with EVs, remained high in the quarter,” Hertz said in a regulatory filing on Thursday.
Hertz not only player cutting back on┬аEVs
German rental car company Sixt said in December that it had┬аnot purchased Tesla vehicles since 2022 and is selling its fleet┬аof Teslas “as part of our regular de-fleeting process.”
Sixt said on Thursday it still plans to offer a range of┬аelectrified vehicles and “stick to our goal to electrify 70 to┬а90┬аper cent of our rental fleet in Europe by 2030.”
Hertz said it would continue to focus on improving┬аprofitability for the remainder of its EV fleet.
Wholesale used-EV prices fell for most of 2023 as prices┬аfor new EVs fell and inventories of unsold electric vehicles rose, according to Cox Automotive data.
Cox forecast before Hertz’s announcement that used EV┬аprices would decline more than overall used vehicle prices┬аduring 2024.
Analyst┬аsays Hertz ‘taking a major loss’
The car rental firm is selling some Tesla Model 3s for as┬аlow as about $20,000 US, nearly half the purchase price for the┬аcheapest variant of the compact sedan.
“While 20,000 cars isn’t a large number in the total┬аused vehicle market, it does mean Hertz will be taking a major loss on each of these sales while further contributing to the┬аtrend of falling used EV values,” iSeeCars.com analyst Karl┬аBrauer said.
Hertz previously set a target for 25 per cent┬аof its fleet to be┬аelectric by the end of 2024.
The┬аcompany’s used car website lists more than 700 EVs on┬аsale including BMW’s i3, Chevrolet’s Bolt and Tesla’s Model 3┬аand Model Y SUVs.
Polestar did not immediately respond to a request for┬аcomment from Reuters.
