[RahulNagaraj]

According to media reports, car rental company Hertz has announced that it will be selling off a third of its electric vehicle fleet. The EV fleet of Hertz, predominantly consisting of Tesla models, will be sold off & the money made from the sale will go into buying ICE-powered cars.



Hertz has stated that low demand for EVs, paired with the higher-than-expected repair costs, was the reason for their sale decision. The company is said to have already begun selling off its EV fleet and will continue through 2024. The electric cars on sale are being offered with steep discounts. However, the company has told shareholders that it will be able to make up for the loss in the coming years.

The car rental company had initially announced plans to purchase 1,00,000 Teslas by the end of 2022. Instead, as of October 2023, Hertz had bought just 35,000 Tesla EVs, with its entire electric vehicle fleet comprising of 50,000 vehicles. In 2022, the company had also announced plans to buy 1,75,000 EVs from GM and 65,000 units from Polestar. Hertz is yet to confirm the status of these plans amidst the EV fleet sale.

Source: TechCrunch

Link to Team-BHP news

[volkman10]

Hertz and Sixt were removing Tesla models from their fleet due to high repair and maintenance costs – mostly caused by improper or excessive use by their drivers – and low resale prices.

Stellantis and BYD to gain as they are the future suppliers to the rental groups.

Tons of Model 3 ads for less than $20,000 started popping up on the web.

Advantage Stellantis as the group will supply up to 250,000 vehicles to Sixt in an agreement reached just weeks after Europe's largest car rental company announced that it would eliminate Tesla vehicles from its fleet.

The multibillion-dollar deal will include cars from brands such as Alfa Romeo, DS, Chrysler, Citroën, Fiat, Jeep, Opel, Peugeot, Ram and Maserati. The first deliveries to the rental company will start that same quarter.

The phase-out of Teslas is partly because the EV maker's price cuts had depreciated the value of its fleets.

Sixt still plans to electrify up to 90 percent of its vehicles in Europe by the end of the decade. In 2022, the company signed an agreement to purchase up to 100,000 BYD electric vehicles by 2028.

Link :

[Bhargav7]

Originally Posted by volkman10

Hertz and Sixt were removing Tesla models from their fleet due to high repair and maintenance costs – mostly caused by improper or excessive use by their drivers – and low resale prices.

Stellantis and BYD to gain as they are the future suppliers to the rental groups.

This is confusing. Improper and excessive use will continue on Stellantis and BYD cars as well! Also, low resale prices should impact the "buy" decision and not a "hold" decision. It is counter-intuitive if someone is selling an asset because it has a low resale value!

Originally Posted by volkman10

The phase-out of Teslas is partly because the EV maker's price cuts had depreciated the value of its fleets.

I do not understand this as well! While I understand that the Net realisable value of their fleet would have decreased, not sure how selling them will solve that issue.

[SmartCat]

Originally Posted by Bhargav7

This is confusing. I do not understand this as well!

To me, it looks like rental companies are just shifting away from Tesla to other companies for their EV portfolio.

1) Car rental companies typically sell off their cars after a few years. So for them, price depreciation curve should be stable and predictable.

2) Tesla EVs typically have a high price tag. And they indulge in frequent price cuts over time based on supply/demand. Just Google "Tesla price cuts".

So this makes Teslas unsuitable for rental companies. But BYD/Stellantis EVs are likely to be priced reasonably and unlikely to indulge in frequent price cuts.

[Pontiac]

On the maintenance,

Their business model is typically buying the car, rent it out under factory warranty for 1-2 years with maintenance typically covered as with car companies, first service is typically free. So, in short, they get a maintenance free car for 1-2 years with some depreciation that they put on market as used car and this cycle repeats.

For Tesla model 3 for instance which they chose for their rental fleet, for the same time frame, they would end up replacing tires which costs close to ~$2K and air filters. Model 3 typically requires tire changes every 13K-16K miles if one uses the tread to their max limit. For a rental company, it will be even less as they cannot rent the car with bad tires and the liability falls on them. Remember, tires on a regular car are rated for 30K for low profile to 60K miles. This itself is a big expense for rental car companies. Then comes insurance and other items that are also high for Tesla as they regularly opt for totaling the car rather than to repair it in case of an accident.

[AVIS]

Low demand for rental EVs makes sense. People who own EVs would need a rental gasoline car for their long distance drives, and not the other way around . Who would want to spend hours of precious vacation / work time to charge these vehicles at expensive public chargers?

Secondly, rental cars are subject to a higher degree of abuse. A battery failure would mean a huge expense for the rental company.

[kkunal.shah]

Saw this CNBC AV recently which makes perfect sense now that the decision has

https://https://youtu.be/UfbkvUXTV_I?si=2ThWFUpkaBpbHq_y

[schumi_pete]

It makes sense, especially when they have to cater to differing demands. I rented a car at Dusseldorf airport to drive down to our plant which is about 200 kilometers away, and Avis gave me a Peugeot e-2008 with a range of 350kms because all the petrol ones had already gone because there was a convention of some sort in Dusseldorf that week. Started the journey with 85% battery, and had to do essentially most of the trip on the German Autobahn.

Imagine how that trip went when I was stuck on the slowest lane on the Autobahn between massive trucks and willing the Peugeot to get me to the hotel with some juice left in the battery. I had to limit myself to 90-100 kph all the way and thankfully reached the hotel with about 15% charge left. Luckily it was summer during this episode and German Autobahns were not blessed with a lot of charging points a few years ago (unsurprisingly) !

I don't think I would like to repeat that experience again. An EV is perfectly fine if the intended rental period only covers city driving. Until at least Solid State batteries arrive (and hopefully soon).

[Iyencar]

In what world is a Tesla less reliable and more temperamental than an Alfa Romeo?! The title seems to indicate they are fed up of EVs and are going back to ICEs while the article says they’re simply switching brands. Am sure there’s some business depreciation component involved in this as well.

[ferrarirules]

Originally Posted by kkunal.shah

Saw this CNBC AV recently which makes perfect sense now that the decision has

Superb video!! It summarizes the problem well. The problems are higher crashes with Teslas in rideshare rentals and longer turnaround times to repair the vehicles. Adding to the misery, Tesla has made around 30% price reduction in car's price in 2023 resulting in huge price crash in used market. Hence they are looking to replace Teslas with EVs which are more suited for their ride share program rentals.

[Monolithic]

I drove a Model 3 SR+ owned by Hertz. It didn't feel good to drive it. I own a Model 3 LR, and drove SR+ also. So, I knew what to expect in terms of real time range, acceleration. The battery seems to have degraded a lot, I was only getting 210 miles at 100%. The car was just slow to accelerate, it was not even in chill mode.

[volkman10]

Next blow to Tesla as German software giant to stop using Tesla for company cars.

Software company SAP claimed Tesla’s fluctuating prices and inconsistent delivery schedules as to why they're moving away from the US auto giant – with the electric carmaker’s stock falling as a result.

Steffen Krautwasser, SAP fleet manager:

The list prices fluctuate more at Tesla than at other manufacturers, which makes planning more difficult and poses a higher risk for us

From Tesla’s perspective, this makes sense. But it causes problems for us

Following SAP’s plans to move its company fleet away from Tesla – the US electric carmaker’s stock reportedly fell 4 per cent, hitting its lowest point in the market since May 2023

Link:

[AltoLXI]

Was Hertz's early adoption of EV cars proved to be a disaster?

CEO of Hertz Stephen Scherr has been booted out due to a vast purchase of an EV fleet that consumers didn’t even want to rent. The company has now been forced to sell them at a deep discount and in a market where consumers are not particularly interested.

Article

[volkman10]

Hertz is off-loading an extra 10,000 EVs due to massive depreciation.

The company has lost hundreds of millions of dollars due to the depreciation of used Teslas.

Hertz is off-loading an additional 10,000 electric vehicles from its fleet because of depreciation. This comes just a few months after it started to sell 20,000 EVs, primarily Teslas.

In 2021, the car rental giant emerged from a brief bankruptcy and reached a deal with Tesla to purchase 100,000 vehicles for its fleet. However, aggressive price cuts initiated by Tesla throughout 2023 destabilized the used market, resulting in huge depreciation of its used vehicles. Other car manufacturers also announced price cuts for their EVs, further contributing to the accelerated depreciation.

The culprits, once again, have been high maintenance costs and depreciation of EVs it has purchased for its fleets, while on the consumer side the EV charging experience has seen its own issues.


Link:

[ajmat]

One factor adding to the depreciation is when Tesla slashed prices during Jan 2023. Rental companies make money as follows:

• Buy at fleet discount and sell as per market
• Insurance add-ons
• Fuel top ups / Full tank prepaid

With the depreciation arbitrage nixed, plus high insurance costs, there were no revenue generation models.