Hertz Backtracks on Electrification: Going Back to Gas-Powered Cars

Car rental giant Hertz is dumping 20,000 electric vehicles (EVs), mostly Teslas, from its fleet and turning back to gasoline-powered cars.

The decision stems from a combination of factors, with Hertz citing higher-than-anticipated repair costs for damaged EVs and lower-than-expected demand from customers. Used EV prices have also been plummeting in the U.S., with data from Recurrent and Cox Automotive showing steeper declines compared to traditional gasoline-powered vehicles. This price drop has impacted Hertz's bottom line, making EV rentals less profitable than initially projected.

"The expenses related to collision and damage, primarily associated with EVs, remained high in the quarter," Hertz stated in a regulatory filing. This comes despite widespread claims of lower maintenance costs for EVs.

This turnaround from EVs marks a significant turnaround for Hertz, which only three years ago placed a massive order for 100,000 Teslas, pushing the automaker's market valuation past the $1 trillion mark.

The company faced challenges integrating EVs into its rental fleet, including limited charging infrastructure and concerns from some customers about range anxiety. Additionally, the higher upfront costs of EVs and their accelerated depreciation in the used car market further dampened their profitability.