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Thursday, July 25, 2024

Hertz CEO Out As Firm Seeks Traction After Big EV Bet Goes Bust

CEO Stephen Scherr’s barely two-year ride with Hertz came to a screeching halt on Friday. In his wake, he leaves a company still working to recover from a big bet on electric vehicles gone bad. It will do so under new CEO Gil West, whose previous posts include executive roles at Delta Air Lines and the Cruise unit of General Motors.    

Scherr, who came on board in February 2022 after 30 years at Goldman Sachs, ushered the company through its emergence from bankruptcy. Hertz’s EV push began in the previous year, with a splashy move to order 100,000 Tesla Model 3 vehicles. After taking the reins of the Estero, Florida-headquartered company, Scherr doubled down on the green vision, committing to purchased another 65,000 EVs from Polestar, a Swedish company. 

Traveling in the US. @Hertz has rows & rows of EVs that no-one wants to rent. They claimed I booked one when I didn’t. Gold member & they mess me around like this.
I refused the EV & eventually I got a real car. What a hassle.
Go woke. Go broke. Rethinking my loyalty to Hertz.

— FermiLevels 🚚🛻🚛🏎 (@FermiLevels) September 10, 2023

In December 2023, Hertz emphatically demonstrated that its massive EV push just wasn’t working out, throwing 20,000 EVs into the used-car market to start a systematic liquidation planned to extend through 2024. “The company expects to reinvest a portion of the proceeds from the sale of EVs into the purchase of internal combustion engine vehicles to meet customer demand,” Hertz said at the time, adding, “The company expects this action to better balance supply against expected demand of EVs.”

The resale of fleet cars is a key driver of rental car companies’ profitability. On that front, Tesla threw a wrench in Hertz’s financials by aggressively slashing prices across its product line, crushing the resale values of not only Teslas, but the entire EV market. Top-selling EV’s saw their secondary-market prices plunge by almost a third in 2023

Poor resale value isn’t the only EV liability biting Hertz — the company also pointed to the high cost of collision repairs. “For context, collision and damage repairs on an EV can often run about twice that associated with a comparable combustion engine vehicle,” Scherr noted in an October third-quarter conference call. 

Guess the cost to repair this?
$5,000?
$10,000?
$12,000?
NO….. estimate cost is $14,000 😂
No wonder why renting companies are ditching Tesla! $TSLA $TSLAQ pic.twitter.com/CcgiTLrnov

— Little John 💎 (@biotechpain) January 17, 2024

Then there’s the issue of consumer demand. It’s fair to assume that most rental car customers don’t want their first EV experiment to come on a business or vacation trip, where they may be in an unfamiliar area and unenthused about spending 20 minutes at a recharging station on the way to the airport, to say nothing of the hassle of figuring out how the whole EV-thing works.

There are many horror stories about consumers unpleasantly surprised to be issued an EV when they didn’t ask for one. Others say they picked up a car that was only half-charged and missing the charging cable. Earlier this month, Sen. Tom Cotton — one of the most sinister foreign-policy interventionists to ever walk Capitol Hill — decided to intervene in the rental car market, by introducing a bill that would make it illegal to force EVs on customers

@Hertz Any help available? I’m on day three of rental and still can’t get help. I was given an EV (that I didn’t want) that can’t fast charge. The employee laughed when I called and said they know. I’m driving to and from the hospital every day and knew a car I can fuel up. 🙏

— Stack (@SmyrnaStack) February 19, 2024

In a statement issued Friday, Hertz vice chair Tom Wagner said, “We are appreciative of Stephen’s contribution over the last two years, including on a number of key strategic initiatives.” 

…but definitely not that EV one. 

This post was originally published on this site

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