After leading the car rental industry with purchases of electric vehicles, and partnerships to develop charging stations, Hertz has decided to sell about 20,000 EVs from its U.S. fleet and use part of the proceeds to replace them with gas-powered vehicles "to meet customer demand," according to a Thursday U.S. Securities and Exchange Commission filing. The sell-off represents approximately one-third of its EV fleet globally.
Hertz cited higher expenses related to collision and damage as one motivation for the move. During an October third-quarter earnings call, Hertz CEO Stephen Scherr noted that the company was "continuing to take steps to rectify the issue of elevated EV damage costs broadly," and that "collision and damage repairs on an EV can often run about twice that associated with a comparable combustion engine vehicle."
During the same call, Scherr also said that during the third quarter the company made productivity gains across most categories of its direct vehicle and operating expenses -- with the exception for vehicle damage costs, "particularly those on our EVs, which we are addressing in a very targeted way."
Scherr on a second-quarter 2023 earnings call noted that corporate customers were strong candidates for EV usage as they "want to satisfy their own carbon-footprint objectives, so they are compelling employees to get into EVs." He added that EVs earn a premium of between $30 to $35 in excess of comparable average rates.
Hertz expects a fourth-quarter 2023 incremental net depreciation expense related to the sale of approximately $245 million, according to the SEC filing. Further, the company anticipates this action will better balance supply against expected demand of EVs.
The company plans to continue to execute its strategy around EVs "and offer customers a wide selection of vehicles." Hertz also will continue to expand EV charging infrastructure, grow relations with EV manufacturers, and continue to implement policies and educations tools "to help enhance the EV experience for customers."
Vehicle sales were initiated in December 2023 and are expected to continue through 2024, according to the company.
Hertz in September 2022 announced plans to purchase up to 175,000 GM EVs over the next five years. The company also made Tesla and Polestar EV purchases. In addition, BP last February announced a $1 billion investment to install EV charging stations across the United States to help Hertz meet EV rental demand.
The company did not immediately respond to a request for comment.
Source: Business Travel News