According to the latest 8-K filed last week by rental car company Hertz, the company “made the strategic decision to sell approximately 20,000 electric vehicles (‘EVs’) from its U.S. fleet, or about one-third of the global EV fleet.” The decision increased the company’s depreciation expense by approximately $245 million – not an insignificant amount. Hertz hasn’t totally given up on EVs, but is responding to what it sees in the current market:
“The Company expects this action to better balance supply against expected demand of EVs. This will position the Company to eliminate a disproportionate number of lower margin rentals and reduce damage expense associated with EVs. The Company will continue to execute its strategy around EV mobility and offer customers a wide selection of vehicles. The Company continues to implement a series of initiatives that it anticipates will continue to improve the profitability of the remaining EV fleet. These initiatives include the expansion of EV charging infrastructure, growing relationships with EV manufacturers, particularly related to more affordable access to parts and labor, and continued implementation of policies and educational tools to help enhance the EV experience for customers. Going forward, the Company will continue to actively manage the total size of its EV fleet, as well as the allocation of EVs among customer segments, including leisure, corporate, government and rideshare.”
This could end up being a net positive for consumer uptake of EVs because Hertz is selling their fleet on the used car market. The prices I’ve seen posted are very competitive – even for internal combustion engines, making EVs more realistically accessible than before to more car buyers. Furthermore, a large influx of 20,000 used EVs could itself deflate prices further creating an even larger boon for shoppers. I won’t get into a discussion about whether it is a good idea to by a used rental car.
If you aren’t already subscribed to our complimentary ESG blog, sign up here: https://practicalesg.com/subscribe/ for daily updates delivered right to you.
Photo credit: Roman Tiraspolsky – stock.adobe.com
