Thursday, May 02, 2024

Why Hertz is selling off its electric vehicle fleet

Car rental giant Hertz made a big splash a couple of years ago when it announced it was investing heavily in electric vehicles (EVs), manly Teslas and Polestars. When I travel to the UK (about once a year), I always rent a Polestar these days, and I have had nothing but good experiences. Plus, Hertz still seems to have a special offer going on its EVs, making them among the cheapest rental cars.

Then, earlier this year, Hertz announced out of the blue that it was selling off most of its fleet of EVs, at least in the US, quoting high repair costs and poor resudual values as the main reasons. So much for the moral high-ground it tried to take in its publicity. It seems it's really about the money.

But wait, high repair costs? What gives? Regular maintenance costs for EVS are a fraction of those for ICE cars, but what they are talking about here are repairs to damage caused by renters. A big proportion of their EV customers, apparently, are rideshare drivers (e.g. Uber, Lyft, etc) who have a tendency to drive their cars into the ground and not take very good care of them. Who knew rideshare drivers rented their vehicles? Sounds like an expensive option, no? And, yes, the research shows that repairs of collision damage to Teslas in particular can be a bit more expensive, partly because of all the connected technology, cameras, etc.

But, hold on? Does Hertz not insure its cars? And do they not rake in money from their customers for the various insurance coverages they try to insist drivers pay for? If a customer, even a rideshare driver, bangs up a rented Tesla, do they not have to pay for those repairs (or at least a hefty insurance premium up-front to cover it)? So, why then is Hertz out of pocket?

And low resale costs? Sure, I can see that. Tesla, in particular, has been slashing its prices over the last year to try and address the soft demand for its cars, especially in the USA, so resale values have also taken a hit. But is the best solution to that to sell everything off as soon as possible, especially given the current poor resale prices? Maybe it would have been better to wait and see how things pan out? A large part of that problem seems to be Tesla-specific, rather than EVs in general.

It just seems a very strange policy to me to go all in on something, and then all out after such a short time. Their much-vaunted commitment to the environment has taken a battering over this. I will take advantage of their EV fleet whenever I can (especially given the good prices), but I will know that they are not doing it out of concern for the fate of the earth.

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