Back in June, I wrote about a new hazard at the car-rental desk: Being handed an unwanted electric vehicle (EV). I returned to this topic in September. In both cases, Hertz, which has made the largest commitment to EVs of any of its peers, did not emerge well.
My own suspicion was (and is) that rental companies have been drawn to EVs at least in part by the chance of getting hold of them at a good price (EVs have been selling less well than planned). But quoting from an article by Saahil Desai in the Atlantic, I noted that he had been given a different explanation by the president of the American Car Rental Association:
EVs, he said, appeal to car-rental companies because they are far easier to maintain (fewer moveable parts) and “seem to hold their value.” The first is true, although EVs appear to be more expensive and time-consuming to repair, something that may change as more of them enter circulation and an improved repair infrastructure evolves. I was, however, surprised to read that EVs hold their value better. With a product moving up sharp innovation curve, that seems counterintuitive, and, indeed, the picture appears to be somewhat mixed.
It seems that I may have been right to have my doubts.
Bloomberg (emphasis added):
Hertz Global Holdings Inc. earnings missed estimates amid headwinds from Tesla Inc. price cuts and the high price of repairs for electric vehicles.
Tesla has been rapidly dropping its prices to spur sales, which has lowered the resale value of the EVs in Hertz’s fleet by about one-third. Repair costs for EVs have also been higher than expected, about double what the company pays to fix damaged gasoline cars, Chief Executive Officer Stephen Scherr said in an interview Thursday.
Hertz will slow the pace of buying EVs while it learns how to manage costs, Scherr said. Hertz has 50,000 EVs currently, of which 35,000 are Tesla models. EVs account for about 11% of its total fleet.
Scherr said Hertz remains committed to buying 100,000 cars from Tesla and 175,000 EVs from General Motors Co., but the rental company won’t meet its goal to have EVs account for 25% of the fleet by the end of 2024, he said. The first order of business is to work with parts suppliers to lower repair costs. As EV prices settle, Hertz will buy more of them, he said.
“We have an opportunity to buy these cars now at roughly a third less than where we bought the initial component of our Teslas,” Scherr said. “We’re ultimately better buyers on a falling price where the margin composition on those cars will be better. They will be even better to the extent that we solve the issues around damage and cost.”