Buy a Tesla Model 3 for $17,800? It’s possible thanks to Hertz. Hertz is selling off 20,000 electric cars to replace them with thermal cars.
We are witnessing a surprising shift. Hertz and Sixt, two giants in the rental sector, are going backwards with the electric car.
In summary, after rushing into Tesla and other brands of electric cars, they are reviewing their strategy. For what ? It all starts with a decision by Tesla in 2023 to lower its prices, which shook up prices on the market and, in turn, the residual value of cars. This is an essential parameter for rental companies. Moreover, repair costs would be higher than expected.
The business of companies like Hertz and Sixt is simple: buy new cars, rent them, then resell them used after a few years. But the crux of the matter is the residual value of these cars. If a car depreciates too quickly, it is no longer financially attractive. Same thing if maintenance and repair costs are too high.
Hertz says goodbye to 20,000 electric cars
As a result, Hertz is saying goodbye to 20,000 electric cars, including many Teslas, and hello to thermal cars.
In the United States, you can now buy Tesla Model 3 Propulsion for $17,800 (around 15,800 euros) on the Hertz website, with around 60,000 km and more on the clock. Tesla, which currently sells 700, mainly Model 3 and Model Y. In total, a third of their electric car fleet will be sold.
Hertz justifies this decision by the repair costs for electric cars, which are heavy, especially after accidents. Their latest financial report says it clearly: these costs justify the drastic reduction in their fleet of electric cars. And, with the money recovered, they plan to reinvest in thermal cars, a shame.
In a document to the SEC, Hertz explains that this maneuver should better reflect future demand for electric cars. Already in October 2023, they announced that they were slowing down the electrification of their fleet.
Their CEO, Stephen Scherr, even declared that EVs cost Hertz “almost double” in repairs compared to a standard thermal vehicle. Amazing information, which contradicts the various reports on the subject.
This seriously raises a question about the integration of electric cars in the rental sector and the future of electrification in this business. But, obviously, rental companies will continue to electrify their fleet. Hertz has signed a major contract with Polestar, from the Chinese group Geely.