Hertz Begins Selling Off EVs, Plans to Buy Gas Vehicles as Replacements

Rental car company Hertz is selling off 20,000 of electric vehicles in its fleet, with plans to replace these vehicles with internal combustion engine vehicles. 

The company cited high repair expenses and low demand as its reasons to sell the EVs, Utility Dive reported.

However, in 2021, Hertz had committed to offering one of the largest rental EV fleets in the world, stating at the time that as “consumer interest in electric vehicles (EV) skyrockets,” the company was planning to purchase more EVs, including 100,000 Teslas.

In April 2022, the company said it would buy 65,000 EVs from Polestar over the subsequent 5 years, CNN reported. Then, in September 2022, Hertz announced similar plans to buy an additional 175,000 EVs from GM, including electric models from Chevrolet, Cadillac and Buick, over the following 5 years.

But a new filing with the U.S. Securities and Exchange Commission from January 11, 2024 revealed that Hertz is looking to offload 20,000, or about one-third, of its EVs. The report noted that Hertz was expecting to use some of the money from the EV sales to purchase more internal combustion engine vehicles.

“The Company expects this action to better balance supply against expected demand of EVs. This will position the Company to eliminate a disproportionate number of lower margin rentals and reduce damage expense associated with EVs,” the SEC report said. 

According to the report, Hertz still plans to offer EV rentals and work toward other EV initiatives, such as expanding charging stations and working with manufacturers to lower the costs of EV repairs.

Experts are concerned about how the sale could impact the EV market as a whole, especially as the company raised concerns over the cost to maintain these vehicles.

“The larger impact of Hertz EV fire sale is the perception hit to the technology,” Karl Brauer, an analyst at used-car aggregator iSeeCars.com, told Reuters. “Mainstream consumers are already hesitant to buy an EV, and this news only supports their concerns.”

Further, some of the EVs currently being sold by Hertz are being offered at significant discounts, and experts are worried this will hurt rates across the secondhand EV market, which has already seen major declines in EV values. As Reuters reported, value in the EV market has declined over 33% from October 2022 to 2023.

At the time of writing, Hertz has over 600 EVs for sale, over 560 of which are Teslas. But Hertz CEO Stephen Scherr told CNBC that although the demand is currently not there for Tesla and other EV rentals, that demand could increase in the future.

“The reality of EVs and Teslas being the best-selling car will, at some point, render them the best rental car,” Scherr told CNBC. “It’s not yet, so we may have been ahead of ourselves in the context of how quickly that will happen, but that will happen.”