Hertz will sell off one-third of its electric vehicles (EVs) and will replace some of its global fleet with gas-powered cars, driven by higher costs and soft demand.
The decision to sell off 20,000 EVs came as the cost of repairs for its EV fleet, mostly made up of Teslas, has been higher than expected, coupled with lower demand.
The company, which plans to purchase gas cars from some EV sales, started selling off EVs in December. Hertz mentioned in a Thursday filing to the Securities and Exchange Commission the recognition of “approximately $245 million of incremental net depreciation expense related to the sale.”
The decision from the rental car giant comes as global CEO Stephen Scherr said in October that the company is cooling off its EV rollout with high repair costs and high allocation of its vehicles to Uber drivers.
Hertz’s plan to cut down on the number of its EVs came as the sales of those cars have slowed down. Its fleet stood at 50,000 EVs total, after purchasing 35,000 Teslas by October.
Scherr planned to buy 100,000 Tesla vehicles in October 2021, an announcement that helped Tesla surpass a $1 trillion market cap. He was still willing to uphold that promise, while admitting Tesla’s price drops cut down the value of its lineup.
Hertz planned to purchase 175,000 EVs from General Motors. Scherr was “committed” to the plan, but the company didn’t mention how it would go about it with the ongoing sale of the EV fleet, in which some vehicles are selling as low as $14,000.
“Our focus and our work with Tesla is to look at the performance of the car so as to lower the risk of incidents of damage,” Scherr told CNBC in 2023. “And we’re in very direct engagement with them on parts procurement and labor and the like.”
The Hill has reached out to Hertz for comment.