Renting Electric Cars Makes Sense—Why Did Hertz Sell Off Teslas? (2024)

FAQs

Why is Hertz selling all their Teslas? ›

The factors influencing Hertz's decision to sell off its Tesla fleet indicate the broader challenges the EV industry faces. The company claims that higher expenses related to collisions and damages for EVs have been a significant concern.

Perhaps one of the reasons you can get such a good deal on a Tesla at Hertz right now is that the outlook for EV value retention is pretty grim at the moment. A recent study from iSeeCars found that electric cars have an average five-year depreciation rate of 49.1%, compared to an industry average of 38.8%.

Now the rental giant is rapidly heading for the exits after a series of painful losses. Hertz intends to get rid of 30,000 EVs, or 10,000 more than initially planned, as part of its EV downsizing, citing substantial vehicle depreciation that increased $588 million in the first quarter of 2024 compared to a year prior.

Hertz attributed the push to reduce the number of EVs in its fleet to an effort to lower what it calls "damage expense." To be fair, Hertz isn't dumping all of its Teslas, but it is still a strong rebuke of its original strategy--and of Tesla's business model.

Our electric vehicle fleet includes Tesla's Model Y and Model 3, you have the freedom to choose the right EV for your car rental needs.

Tesla is seen as a leader in electric vehicle technology, with advanced features like Autopilot and a superior range that continue to attract buyers.

Does Hertz charge a premium for me to charge at a Tesla Supercharger? No – whatever charges you incur at Tesla's network charging station, we pass through directly to the credit card you used to rent your EV. We do not charge any additional fees beyond what Tesla charges outright.

Hertz is starting to sell some of its Tesla Model 3s and they are going for pretty cheap – as low as $14,000 with the used EV tax credit. 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.

Estimates suggest that the batteries for the Model S cost between $12,000 and $15,000. After labor charges, the total repair cost is about $20,000 to $22,000. For the Model 3, the replacement cost around $15,799.27, with the battery alone costing over $13,500 and labor costing $2,299.27.

Rental firm Hertz Global Holdings said on Thursday it would sell about 20,000 electric vehicles, including Teslas, from its U.S. fleet due to higher expenses related to collision and damage, and will opt for gas-powered vehicles.

Why is Hertz going back to gas cars? ›

Hertz Global Holdings Inc. plans to sell a third of its US electric vehicle fleet and reinvest in gas-powered cars due to weak demand and high repair costs for its battery-powered options.

The most obvious reason for consumer disenchantment is the hassle of charging EVs. Few drivers are willing to plan their lives around finding a charging station and waiting around for their battery to top up. During the nation's recent Arctic blast, motorists found that getting a full charge took even longer.

Critics have noted that some Tesla cars have had poor build quality due to rushed testing, leading to a high ratio of flawed vehicles. Others criticized the company's "stealth" vehicle recalls, requiring customers to sign non-disclosure agreements.

Tesla reported that first-quarter revenue was $21.3 billion, down 9% from last year as worldwide sales dropped nearly 9% due to increased competition and slowing demand for electric vehicles.

Hertz reported several reasons for the sale, which opened up questions about how viable EVs are in a rent-a-car fleet. Many of the reasons actually stem from the unfamiliarity many customers had with EVs, especially Teslas, when having their first experience with one.

Hertz disclosed that it took delivery of only half its massive Tesla order of 100,000 electric cars. However, the numbers don't add up. 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.

The news helped Hertz distance itself from a chaotic bankruptcy and pushed Tesla's valuation over the $1 trillion mark for the first time. But it never happened. Instead, as of October 2023, Hertz had only purchased 35,000 Teslas and its entire electric fleet included about 50,000 EVs total.

In 2021, at the height of the Tesla hype boom, Hertz announced it would make 20 percent of its cars electric — it never got to quite that level, but it did end up buying about 30,000 Teslas. (It bought other EVs, too, but most of the fleet comes from Elon Musk's company).

Hertz Buying 100,000 Teslas in $4.2 Billion Deal, Making EVs 20 Percent of Its Fleet. Tesla CEO Elon Musk denies there's a contract with Hertz and says the rental giant will pay full price for cars. Hertz says it has an 'initial order' and has already started taking delivery of Teslas.