Hertz decides to slow down its EV
Hertz decides to slow down its EV

Hertz decides to slow down its EV expansion

What To Know

  • This announcement followed Hertz’s disclosure of a 13 percent margin for the quarter, a figure that Scherr noted would have been “several points higher” if not for the challenges associated with the costs of EVs.
  • Tesla had implemented a series of price reductions over the past year, with a nearly 20 percent price cut on the Model S and X in September.
  • ” In response, the company is actively collaborating with Tesla to improve the performance and minimize the risk of damage, as well as enhance the efficiency of parts procurement and labor.
  • He anticipates that Hertz will be able to purchase non-Tesla EVs at a considerably lower price point, which could result in a reduced incidence of damage, as well as lower costs for parts and labor.

In 2021, Hertz made a significant announcement, declaring its intent to acquire 100,000 electric vehicles from Tesla by the close of 2022. However, it appears that the car rental giant is now facing obstacles on its path to achieving this ambitious goal, and there is uncertainty regarding whether they will ultimately reach the 100,000 mark. This is due to Company’s decision to slow down its electrification plans.

During a recent earnings call in the company’s third quarter, Company’s CEO, Stephen Scherr, revealed that the pace of acquiring electric vehicles (EVs) for their fleet would be slower than initially anticipated. This announcement followed Hertz’s disclosure of a 13 percent margin for the quarter, a figure that Scherr noted would have been “several points higher” if not for the challenges associated with the costs of EVs.

Several factors contributed to the strain on Company’s margins. Depreciation was one significant factor, exacerbated by a 33 percent drop in retail prices for electric cars in their fleet. Tesla had implemented a series of price reductions over the past year, with a nearly 20 percent price cut on the Model S and X in September.

Moreover, CEO Scherr expressed concern over the higher repair costs of EVs, stating that they are costing Hertz “about twice as much in terms of damage repair costs as conventional internal combustion engine vehicles.” In response, the company is actively collaborating with Tesla to improve the performance and minimize the risk of damage, as well as enhance the efficiency of parts procurement and labor.

Hertz pulls back on EV plans citing Tesla price cuts, high repair costs

According to Hertz’s earnings report, a substantial 80 percent of its EV fleet consists of Tesla vehicles, amounting to 35,000 Teslas out of the 50,000 EVs in their fleet. The shift of a portion of these EVs from ridesharing to leisure usage also had a negative impact on Hertz’s profit margins.

Hertz had previously supplied Tesla EVs to Uber and Lyft drivers but is now in the process of returning these vehicles to their ridesharing business. Despite these challenges, Scherr reiterated Hertz’s unwavering commitment to its long-term electrification plan, emphasizing that they intend to address these issues at a sustainable pace.

CEO Scherr pointed out that embracing EVs from other manufacturers, such as General Motors (GM), could help alleviate some of the problems Company is currently grappling with. He anticipates that Hertz will be able to purchase non-Tesla EVs at a considerably lower price point, which could result in a reduced incidence of damage, as well as lower costs for parts and labor.

GM and other traditional automakers have an extensive nationwide network for parts supply that has been established over many years, making it easier and potentially more cost-effective to procure components, thanks to the availability of aftermarket options.

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