Hertz announced a decisive move to sell tens of thousands of Tesla EVs as the company grapples with mounting losses from depreciation and poor fleet management, Bloomberg reported.
The rental giant reported a $1.44 per share loss in Q2 2024, driven by fleet refreshment efforts that saw per-unit depreciation skyrocket to $600 a month, more than triple the amount from a year ago.
The decision marks a further shift from Hertz’s ambitious 2021 plan to purchase 100,000 Teslas, a move that initially buoyed Tesla’s stock and pushed the EV maker's market cap to more than $1 trillion. However, Hertz’s inability to manage and maintain its growing EV fleet has led to severe financial repercussions, including a $195 million charge in Q1 to write down EVs held for sale and a $588 million increase in vehicle depreciation compared to the previous quarter.
Hertz announced earlier this year it would be scaling back its initial electrification strategy, which included the goal to have 25% of its fleet electric by the end of 2024. In a regulatory filing in January, it said "Expenses related to collision and damage, primarily associated with EVs, remained high in [Q3 2023]."
In addition to its Teslas, the company's current car sales inventory shows EVs from Mercedes-Benz, Subaru, Volvo and Chevrolet -- including electric versions of the Silverado in the fleet-specific Work Truck trim.
Former Hertz CEO Stephen Scherr resigned in March, shortly after the company's announcement to downsize its EV fleet. Gil West, the former COO of Delta Airlines and GM's self-driving division, Cruise, has since taken over as CEO.
West said the company's efforts to offload its Tesla inventory would be complete by the end of 2025, with monthly depreciation expected to normalize to the low $300s per unit once the overhaul is finalized.
Hertz’s stock has plummeted 60% this year, reflecting investor concerns over the company’s financial stability. As Hertz moves forward with its Tesla offloading plan, the company hopes to stabilize its operations and recover from the setbacks caused by its mismanagement of the EV fleet.
