Rental car giant Hertz is dramatically expanding its electric vehicle selloff program, with used Tesla Model 3s now available for under $20,000 as the company grapples with mounting EV depreciation costs. Hertz’s heavy investment in Tesla EVs has been a disaster causing massive losses and the loss of its CEO.
Inside EVs reports that Hertz’s ambitious electric vehicle program has hit another significant roadblock, with the company reporting an 89 percent increase in EV depreciation costs, amounting to $537 per vehicle per month. The rental car company has committed to selling 30,000 electric vehicles from its fleet by the end of 2024, marking a stark reversal from its earlier EV adoption strategy.
The company’s current predicament stems from its bold 2021 initiative to “go green,” which included plans to purchase 100,000 Tesla Model 3s. While this initial vision appeared promising, with benefits including reduced maintenance costs and strong customer interest, the strategy has since encountered numerous challenges that have forced a significant course correction.
A primary factor in Hertz’s EV difficulties has been Tesla’s multiple price reductions, which have severely impacted the residual value of the rental fleet. These price cuts have created a ripple effect throughout the used EV market, leading to accelerated depreciation of Hertz’s electric vehicle assets. The company is now offering used Tesla Model 3s at prices below $20,000, with additional savings possible through the $4,000 federal tax credit available for used EVs.
The financial impact has been substantial. Beyond the depreciation costs, Hertz has discovered that its Tesla fleet hasn’t delivered the anticipated cost savings. Repair expenses have exceeded expectations, and the company has experienced higher-than-anticipated collision rates with its Tesla vehicles, resulting in significant restoration costs and extended repair times.
These compounding factors have contributed to multiple quarters of losses, resulting in the resignation of CEO Stephen Scherr earlier this year.
The financial nightmare has Hertz’s new leadership to initiate a widespread divestment of its EV fleet. The company plans to maintain only enough electric vehicles to meet actual customer demand for EV rentals, marking a significant scaling back of its original electric mobility ambitions.
The selloff program will continue through 2025, with the company attempting to minimize losses as used EV values continue to decline. Current market prices for these vehicles appear to be stabilizing between $20,000 and $25,000, providing some predictability to the company’s loss mitigation efforts.
Read more at Inside EVs here.
Lucas Nolan is a reporter for Breitbart News covering issues of free speech and online censorship.
