A MAJOR car rental company revealed thatis reducing its EV collection after suffering high costs for electric models.
Hertz will reduce its selection of EVs for another 10,000 vehicles than planned, selling 30,000 electric cars this year.
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The car rental company planned to buy around 100,000 Teslas during the pandemic in hopes of increasing people’s travel habits in 2021, Automobile Week reported.
The 30,000 EVs it will get rid of now are 10,000 more than Hertz initially planned.
The car rental company reported a loss almost three times worse than analysts expected, Bloomberg reported.
This represents about a third of the company’s electric vehicle fleet.
More about electric vehicles
The company said it lost $1.28 per share, contrary to analysts’ expectations of a loss of 44 cents per share.
The company is selling the cars as part of its electric vehicle retrenchment after the value of many of its cars plummeted.
Hertz cited high repair costs and weak demand from its customers in connection with its decision.
Now the rental company is trying to quickly get rid of EVs after a series of big losses.
“The company incurred a $195 million vehicle depreciation charge to amortize EVs held for sale,” the car rental giant said in a filing.
“Which remained in inventory at the end of the quarter at fair value and recognize disposal losses on EVs sold in the period.”
The EV charging experience has raised some questions on the consumer side.
Due to the combination of EV issues for Hertz and EV drivers, the car rental business suffered a loss of $392 million in the first quarter.
While Hertz typically makes money by selling its used rental cars after they accumulate a certain mileage, the same is not true for used EVs.
The company recently parted ways with CEO Steven Scherr in March.
His dismissal was linked to the fact that the bet on EV had not yielded results, despite looking promising a few years ago.
The uncertainty surrounding whether EVs are taking off as Elon Musk has predicted in the past could mean a good thing for people who have avoided buying one because of the cost.
HERTZ EV Losses
The rental car company reported a loss nearly three times worse than analysts expected on EVs.
- The company is selling the cars as part of its electric vehicle retrenchment after the value of many of its cars plummeted.
- Hertz cited high repair costs and weak demand from its customers in connection with its decision.
- Hertz lost $1.28 per share.
- This represents a total of US$392 million.
- The car rental company charged $195 million for depreciation.
- Hertz said its monthly depreciation costs rose to $592 per vehicle.
- Hertz said the $119 in monthly depreciation per vehicle was related to the additional EVs it holds for sale.
- The company’s direct EV operating expenses increased 3% to $1.4 billion.
- The company parted ways with CEO Steven Scherr due to the fact that the bet on EV did not pay off.
- Last month, daily revenue fell 7% to $56.68.
- Vehicle utilization dropped slightly to 76% as rental companies like to target 80% or higher.
In 2019, Musk made a surprising claim about Tesla vehicles.
He announced that electric vehicles would rise in value, not fall, after purchase, but the opposite is happening, according to CNN.
Buying a used EV may be a good value if you’re already a fan of EVs, although the Hertz situation may give you pause.
With Hertz selling a good portion of its electric vehicle fleet, this highlights the growing pains in the electric vehicle market, which means used EVs could get cheaper.
Many used EVs qualify for a tax credit of up to $4,000 that you can get at the dealership as an instant rebate, according to personal finance enthusiasts with The climb.
The drop in value could be bad news for people who have already purchased new, higher-priced electric vehicles because their cars could depreciate in value more quickly than expected.
Despite this, more used electric vehicles on the market could be good news for electric vehicle buyers.
This story originally appeared on The-sun.com read the full story
