Paul Jolly: Electric Shock for Hertz

Hertz Car Rental is always forward thinking and got my thumbs up when they included a fleet of Shelby 350GT Mustangs on their fleet knowing customers would rent them for track day events. They even provided race cover insurance.

So, it was no surprise that they invested heavily in a fleet of 60,000 Tesla EV’s and options on another 40,000 EV’s to show their green credentials and to steal a march on other rental firms. This huge order put a big smile on Elon Musk’s face as his Tesla organisation’s value leapt to 1$ Trillion. This was the largest EV order in history and Hertz signed up Uber among others as customers.

For their part, Uber looked bang up to date. Their customers loved the EV concept with the company goal of achieving carbon neutrality by 2030.

But then it all went wrong. EV’s sustained massive damage repair and servicing costs well over what conventional cars cost for the same work. Tesla doesn't have as many spare parts and trained repair technicians as regular manufacturers.  Uber drivers are also notorious for driving their cars into the ground and cover at least 40000 miles per annum. The off-road time and repair bills were unpredicted.

Then, without warning, Elon Musk slashed the price of his Teslas to boost flagging sales and this had a serious knock-on effect for Hertz who typically de-fleet when stock is about a year old. When a major player like Hertz starts dumping stock, the motor trade takes notice. The reputation for second hand EV values was badly hit. This then down valued Hertz’s own shareholding since its fleet forms part of the valuation.

Additionally, and perhaps most importantly, traditional hirers were not impressed. Business travellers and families on long distance trips did not want the stress of seeking out charging points or the recharging wait times. Americans like to ‘Eat and Go’.

Hertz lost around $12500 per car and $245M in total. They are replacing much of the fleet with fossil fuel cars.

While Hertz isn't pointing the finger, it appears that Tesla is the problem here.