Hertz (HTZ-7.86%) is paying the price for unloading its Teslas. Shares sank Friday by more than 10% after Hertz announced it had completed selling off its glut of 30,000 electric vehicles.
In 2021, the company had been all-in on EVs, declaring them a safe, fuel-free bet on the future and committing to stocking 100,000 of them. But the company quickly ran into the buzzsaw of tepid customer demand, depreciation, and higher-than-expected maintenance costs.
Hertz endured a brutal fourth quarter, with revenue cratering by 7% from the previous year. On Thursday, the company pinned the decline on ongoing adjustments in its fleet strategy, including a completed reduction of 30,000 electric vehicles, mainly Telsas, along with a few Polestars.
Hertz stock fell more than 10% on Thursday, to about $3.80 per share.
The company isn’t completely unplugging from EVs, according to CEO Gil West.
“Moving forward, we recognize the strategic value of EVs in the markets with established product market fit and infrastructure, particularly in our Rideshare business where drivers receive advantageous partner incentives for choosing EVs over traditional ICE vehicles,” West said.
A company spokesperson told Quartz that the company would continue to sell EVs through its normal retail channels.
Todd Cassidy, managing director and lead of the automotive and aftermarket investment banking group at Brown Gibbons Lang & Company, said that on the long road to electrification, Hertz’s misstep is just a blip, but in the short-term it is a setback.
“In the near term, it is a negative headwind for EVs,” Cassidy said, adding that flooding the market with lower-priced EVs creates price pressure everywhere. Cassidy said the Hertz experience highlights the lack of infrastructure for EVs and the public’s underwhelming appetite for them. He added that when customers rent a car, they are usually already in an unfamiliar city, and many travelers don’t want to the added task of finding a charging station.
“In the grand scheme of things, it is a bump in the road, but for EV adoption over the next two — three years, it is a pretty negative marker that a major rental-car company feels a need to unload their EVs,” Cassidy said.
Even the EV fire sale hasn’t gone smoothly with customers reporting glitchy and subpar cars after purchasing them from Hertz.
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