Auto Service World
News   January 23, 2024   by Adam Malik

Hertz unloading EVs for ICE

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High costs of repair are pushing rental giant Hertz to sell off its electric vehicle rental fleet in favour of internal combustion engines for its customers.

In all, Hertz plans to sell 20,000 EVs, about a third of its entire EV fleet. They will use the money to buy gas-powered vehicles for consumers to rent.

“Collision and damage repairs on an EV can often run about twice that associated with a comparable combustion engine vehicle,” Hertz CEO Stephen Scherr said during an analyst call.

In an Auto Service World Conversations podcast episode, Kevin FitzPatrick, senior vice president at OPUS IVS, dug into the reasons why an EV repair — particularly Tesla — is much higher than an ICE vehicle.

“The scarcity of talent, which means that you can charge a premium, and I think people are going to take advantage of that for better or for worse,” he said as one of the reasons. He also noted a lack of willingness in the automotive aftermarket to get involved.

Furthermore, as EV prices decline in the new car market segment, the resale value of Hertz’s used EV rental cars is being pushed down.

“The MSRP declines in EVs over the course of 2023, driven primarily by Tesla, have driven the fair market value of our EVs lower as compared to last year, such that a salvage creates a larger loss and, therefore, greater burden,” Scherr said.

However, industry observers noted that Hertz selling off the EVs will give consumers another avenue to purchase an EV at a discounted rate.

In a Securities & Exchange Commission filing, Herz said it expects to take a $245 million loss due to depreciation on the EVs — an average of about $12,250 per vehicle.

Tesla makes up about 80 per cent of Hertz’s EV options, which total about 11 per cent of the company’s rental fleet.

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