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Hertz Global Holdings Inc., once a leading advocate for electrifying its vehicle fleet, has announced plans to offload approximately a third of its U.S. electric vehicles (EVs), citing sluggish demand and burdensome maintenance costs, Bloomberg reported.
The move marks a significant retreat from the company’s ambitious electric transition initiated just a few years ago.
“As part of our dedication to personalized service and seamless travel, we offer electric vehicle (EV) rental cars in North America. Our selection of quality electric rental cars – the vehicles of tomorrow – lets you choose a greener way to travel with models from Polestar, Tesla, and more available,” according to the Hertz website.
The company added, “Our broad selection of electric vehicles lets you choose a greener way to travel. Our innovative EV fleet options boast ample power and advanced features that make journeys comfortable and convenient. And with no tailpipe emissions, EVs are helping to make the air in our towns and cities cleaner.”
Hertz began the sale of 20,000 EVs last month, a disposal that is slated to proceed throughout 2024. This divestment was disclosed in a recent regulatory filing where the company also noted an expected non-cash charge of around $245 million for the fourth quarter, attributed to increased net depreciation expenses.
In 2021, the company made headlines by ordering 100,000 vehicles from Tesla Inc., signaling strong confidence in the burgeoning EV market. However, the reality has proven less optimistic. EV sales, which saw a mere 1.3% increase in the last quarter of 2023, have been hampered by high prices and rising interest rates.
“The elevated costs associated with EVs persisted,” stated Hertz CEO Stephen Scherr. “Efforts to wrestle it down proved to be more challenging than anticipated.”
In the wake of the announcement, Hertz’s stock took a hit, dropping 4.3% to $8.95 in morning trading in New York, reflecting a continuing decline after a 32% fall in the previous year, according to Bloomberg.
The company’s strategic shift includes a more cautious approach to acquiring EVs. Hertz’s existing agreements to purchase 175,000 EVs from General Motors Co. and 65,000 from Polestar over the coming years may now face delays. Funds from the EV sale will be reallocated to procure gas-powered vehicles, in an effort to “better balance supply against expected demand.”
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