The car rental agency will sell a third of its U.S. electric fleet and reinvest in gas powered cars due to a downward spiral of EV sales.
Hertz Global Holdings Inc. plans to sell a third of its U.S. electric vehicle fleet and reinvest in gas-powered cars due to weak demand for the battery-powered options.
The sales of 20,000 EVs began last month and will continue over the course of 2024, the rental giant said Thursday in a regulatory filing. Hertz expects to record a non-cash charge in its fourth-quarter results of $245 million related to incremental net depreciation expense.
“The company expects to reinvest a portion of the proceeds from the sale of EVs into the purchase of internal combustion engine vehicles to meet customer demand,” Hertz said. “The company expects this action to better balance supply against expected demand of EVs.”
In October, Hertz Chief Executive Stephen Scherr said the company would scale back on EVs, which had made up 11 percent of its total fleet. Tesla represented 80 percent of that. He said EVs come with higher repair costs compared to the rest of its cars, which has hurt its bottom line. “EV’s will be slower than our prior expectations,” he said during the company’s third-quarter earnings call.
Hertz shares were down 4.2 percent to $8.95 when the market closed Thursday. The stock declined 32 percent last year. “Expenses related to collision and damage, primarily associated with EVs, remained high in the quarter, thereby supporting the company’s decision to initiate the material reduction in the EV fleet,” Hertz said.
Hertz expects to recognize about $245 million of incremental depreciation expenses from the proposed sale in the fourth quarter of 2023.Hertz said in April 2022 it would buy up to 65,000 EVs over five years from Polestar, months after the rental car firm decided to order 100,000 Teslas by the end of 2022.
The company’s used car website has a variety of more than 700 EVs on sale, from BMW’s i3 and Chevrolet Bolts to Tesla’s Model 3 and Model Y crossovers. The dramatic shift away from EVs underscores the waning demand for all-electric cars in the U.S. EV sales slowed sharply over the course of 2023, rising just 1.3 percent in the final quarter.
