- Hertz selling 20,000 EVs due to high damage costs.
- Switching to gas cars for financial reasons.
- Expects $245 million depreciation in Q4 2023.
Hertz Global Holdings (HTZ.O) has revealed plans to sell approximately 20,000 electric vehicles (EVs) from its U.S. fleet, citing increased expenses related to collision and damage as the primary reason for the shift. The decision has led to a notable decline in the company’s stock, with shares falling up to 9% in premarket trading.
The rental firm, known for operating EVs from manufacturers like Tesla Inc (TSLA.O) and Polestar, stated that expenses associated with collision and damage, particularly linked to EVs, have remained elevated. In response, Hertz has opted for a strategic move to reduce its EV fleet and transition towards gas-powered vehicles.
As part of its earlier commitment to embrace electric mobility, Hertz had announced in April 2022 that it would procure up to 65,000 EVs over a five-year period from Polestar. This decision followed the rental car company’s earlier move to order 100,000 Tesla vehicles by the end of 2022.
Hertz anticipates recognizing approximately $245 million in incremental depreciation expenses from the proposed sale during the fourth quarter of 2023. The company, whose used car website currently features over 700 EVs for sale, ranging from BMW’s i3 and Chevrolet’s Bolt to Tesla’s Model 3 and Model Y SUVs, appears to be adjusting its electric vehicle strategy in response to evolving market conditions and financial considerations.
The announcement highlights the ongoing challenges and considerations faced by companies navigating the transition to electric vehicles, as they balance the benefits of sustainability with the practicalities of operational costs and market dynamics.
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