Hertz announced in an SEC filing that it will sell about 20,000 electric vehicles from its U.S. fleet, approximately one-third of the car rental company’s global EV fleet. The company added in the filing that it plans to use a portion of the money from these sales to purchase internal combustion engine vehicles.
The vehicle dispositions began last December, and Hertz expects them to continue through 2024 and cover various vehicle makes and models.
The decision will lead to about $245 million in depreciation, which will be acknowledged in Hertz’s financial records during the fourth quarter of 2023.
Hertz expects the move to balance electric vehicle supply with the expected demand. It could also help the company limit expenses related to EV damage. According to a comment from Hertz chairman and CEO Stephen Scherr in an earnings call last October, collision and damage repairs on an electric vehicle can cost about twice as much as a comparable combustion engine vehicle.
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Scherr further explained that the decline in manufacturers’ suggested retail price for electric vehicles in 2023 led to a lower fair market value for Hertz’s EVs compared to 2022. This, in turn, results in a more substantial financial loss when dealing with salvaged vehicles.
Scherr mentioned that the reduced MSRP was “driven primarily by Tesla,” which represents about 80% of the rental car company’s electric fleet.
Hertz still plans to offer customers a variety of electric vehicles, and the company said it would also continue to implement initiatives designed to improve the profitability of the remaining EVs in its fleet. These initiatives include expanding the EV charging infrastructure and pursuing more affordable access to parts and labor.
