Hertz is accelerating its sales of Tesla vehicles and plans to sell tens of thousand more this year as their value crumbles.
Back in 2021, Hertz announced an important effort to electrify its fleet of rental cars, led by a massive purchase of 100,000 Tesla Model 3 vehicles. Later, the company added Model Y vehicles to the order.
The rental company’s Tesla fleet grew over the last few years, and it reported that Tesla vehicles are increasing Hertz’s customer satisfaction.
But the honeymoon phase ended quickly as Tesla started slashing Model 3 and Model Y prices in 2022 and 2023, resulting in crashing the resale value of its vehicles.
This was incredibly harmful to Hertz as its financials rely on its fleet maintaining its value.
By 2020, Tesla Model 3 managed to retain up to 90% of its value within 3 years.
Then in the next 3 years, they lost nearly 50% of their value. It was even greater for Model Y from its peak in 2022.
Earlier this year, Hertz announced that it would sell about 20,000 Tesla vehicles early in order to counter this trend.
However, with the release of its earnings today Hertz announced that it would accelerate the sales of Tesla vehicles. The company now expects to transition its fleet fully by the end of next year (via Bloomberg):
Hertz has said it will sell tens of thousands of Tesla electric vehicles this year. The company said Thursday that it expects the fleet overhaul to be substantially done by the end of 2025, by which point monthly depreciation will normalize in the low $300s per unit.
In comparison, and thanks to the Tesla fleet, Hertz is currently seeing per-unit depreciation of $600 a month.
Electrek’s Take
I think this was bad timing for Hertz. High interest rates and slower economics, resulting in people delaying purchases, resulted in Tesla having to slash prices to keep demand up with production.
Hertz was bold and it went big with a fleet of 100,000 vehicles, but that means that the impact of a drop in value would be felt even more.
The company also made quite a few mistakes with things like battery charge requirements when returning the vehicles that have
But there’s a ton of value in having EVs as rental cars. It’s appreciated especially for EV drivers when they are travelling. Also, Tesla vehicles are particularly good for that as you can transfer your driver profile to the rental car easily. That’s awesome.
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