Hertz, a prominent global car rental company, made a significant commitment to electric vehicles (EVs) by placing a substantial order of 100,000 EVs from Tesla in 2021. At that time, the company anticipated that approximately 25% of its extensive fleet, comprising about 500,000 vehicles, would be electric by the year 2024. Hertz promoted its shift to EVs with advertisements featuring Tom Brady and launched a campaign outlining its intentions to "electrify major cities" such as New York, Atlanta, and Houston.owever, it came as a surprise to many when Hertz announced its decision to sell 20,000 of its EVs, equivalent to approximately one-third of its total electric fleet. One cited reason for this move was the high costs associated with repairing EVs. CEO Stephen Scherr acknowledged that another contributing factor was the lower demand for EVs compared to Hertz's initial expectations.
In a CNBC interview, Scherr mentioned, "We may have been ahead of ourselves."
Elizabeth Sturcken, Managing Director of Corporate Partnerships at the Environmental Defense Fund, characterized the decision as a "straightforward business decision" in conversation with CFO Brew. Sturcken explained that Tesla's price reductions in 2023, driven by competition from Chinese EV manufacturers, resulted in higher depreciation costs than Hertz had initially estimated when acquiring the vehicles. This, in turn, led to a decrease in the company's valuation.
Elizabeth Sturcken, Managing Director of Corporate Partnerships at the Environmental Defense Fund, characterized the decision as a "straightforward business decision" in conversation with CFO Brew. Sturcken explained that Tesla's price reductions in 2023, driven by competition from Chinese EV manufacturers, resulted in higher depreciation costs than Hertz had initially estimated when acquiring the vehicles. This, in turn, led to a decrease in the company's valuation.
