Hertz Reassesses EV Fleet Strategy Amidst Tesla Price Drops

Matt Brand
October 29, 2023

Hertz faced a 15% decline in stock value after their Q3 reports revealed a miss in earnings projections, largely attributed to Tesla's recent price reductions - according to a Bloomberg report.

The car rental giant's investment in 35,000 Tesla vehicles has been impacted as Tesla slashed prices for its Model 3 by 17% and Model Y by 26% this year, diminishing the resale value of Hertz's fleet.

Tesla's strategy to rejuvenate demand led to significant price cuts throughout the year. Consequently, Hertz CEO, Stephen Scherr, confirmed that the estimated resale value of their Tesla vehicles has decreased by approximately one-third.

Hertz's 50,000-strong electric vehicle (EV) fleet has also seen repair costs that are about double those of their petrol counterparts. Notably, Tesla repairs, especially after accidents, are notoriously pricey. Hertz's fleet also includes a substantial number of Polestar vehicles, which, being premium European EVs, come with high repair costs.

According to Bloomberg, these challenges have prompted Hertz to reconsider its EV strategy. While the company currently boasts 50,000 EVs, with 35,000 being Tesla models, they only make up 11% of Hertz's total fleet.

Despite the setbacks, Scherr remains optimistic about Hertz's commitment to EVs. The company still plans to purchase 100,000 Tesla vehicles and 175,000 from General Motors Co. However, the initial target of EVs making up 25% of Hertz's fleet by 2024 might be delayed.

Scherr's immediate focus is on collaborating with parts suppliers to reduce repair expenses. He believes that as EV prices stabilize, Hertz will be in a better position to expand its EV fleet.

Scherr commented on the current market situation, stating, "We can now acquire these vehicles at nearly a third of our initial Tesla purchase cost. With decreasing prices, our margins on these cars will improve, especially if we address the repair cost issues."

In line with their commitment, Hertz aims to acquire 10,000 EVs from GM this year and has agreements in place for an additional 165,000 vehicles.

It's worth noting that 2022 saw a general decline in used vehicle residual values in the U.S. As the market adjusts, Hertz's revenue from selling its used rental cars has been affected.

In Australia, Tesla prices were further cut by $3900 across all variants of the Tesla Model 3 and Tesla Model Y on the 1st of July, 2023.

Hertz Australia utilises a fleet of Polestar 2's, Tesla Model 3 and Tesla Model Y. It is unclear how the price cuts have effected the Australian division of Hertz specifically.

Looking for car finance?

Get pre-approved car loan offers from over 30 Aussie lenders in minutes.

Matt Brand
Matt Brand, the esteemed car critic from Car Sauce, offers unparalleled expertise on all things automotive. From new car releases to pre-owned options, he provides in-depth analysis and honest evaluations to guide readers through the car-buying process. Join us as he delves into the exciting world of motoring.

Other car news

Suzuki Confirms 2024 Swift for Australia: Get the Full Scoop Here!

2024 Suzuki Swift confirmed for Australia, most likely with a 1.2L engine, enhanced tech, and fresh design.
Matt Brand
December 7, 2023

2024 Suzuki Jimny XL (5-Door) Price and Specs

Suzuki Australia launches Jimny XL, blending iconic 4x4 performance with new 5-door, extended wheelbase and colors. Starting at $34,990.
Jacob Brooke
December 5, 2023

Suzuki Australia Reintroduces Jimny 3 Door Auto Amid Increased Production

Suzuki Australia resumes orders for Jimny 3 Door Auto immediately, following increased 2024 production, alongside launching Jimny XL.
Matt Brand
December 5, 2023

Sign up to our newsletter

Be the first to know when we drop new car reviews.

By clicking Sign Up you're confirming that you agree with our Terms and Conditions.
Thank you! Welcome to the Car Sauce community!
Oops! Something went wrong while submitting the form.