Car rental company Hertz recently announced that it is selling 20,000 EVs, about one-third of the company’s electric vehicle fleet. According to reporting from Bloomberg, Hertz has decided to cut back on EV rental cars because of high repair costs and weak demand from its customers.
This announcement was somewhat surprising to industry analysts, because Hertz had previously made big EV purchasing deals with electric vehicle makers like Tesla and Polestar. But if a major rental car company like Hertz is seeing slow demand (and high costs) for electric vehicles, this could be a sign of additional trouble for EV owners. After all, if a big rental car company can’t afford the repair costs of EVs, what hope is there for ordinary people who have to pay for EV car insurance and other EV maintenance costs?
Let’s look at a few high-level insights on how this Hertz EV sale might affect EV prices for car buyers and EV owners.
Bad news for EV owners: Your EV’s value might take a hit
First, the bad news. If you’re an electric vehicle owner who paid top-dollar for a new EV a few years ago, this selloff of EVs from Hertz is a bad sign. That’s because 20,000 more used EVs are about to come onto the market, helping to drive down prices of used EVs. If you were hoping to sell your EV or trade in your EV in 2024, your used car might have just depreciated by a larger amount.
The fact that Hertz is selling so many EVs because of repair costs is also a bad sign for electric vehicle owners. If Hertz — a big rental car company with lots of employees who can fix cars — can’t afford to cope with EV car repairs, this could mean that EVs are still having trouble with reliability and expensive parts. The high cost of repairing EVs can also make these vehicles more expensive to insure.
If you’re worried about your total costs of EV ownership (maintenance, insurance, etc.), you might want to consider leasing an EV instead of buying. Leasing a car has some drawbacks, but it gives you a lower monthly payment and (often) lower maintenance costs compared to owning an older vehicle that’s no longer under warranty.
Good news for EV buyers: Buying used EVs might get cheaper
Are you thinking of buying an EV in 2024? This news from Hertz might give you pause. What if new EVs are still too expensive, too unreliable, and too much hassle for now? Many would-be EV buyers are waiting for the next generation of cheaper, better batteries. If you’re still worried about EV maintenance and have battery range anxiety, you might want to wait before buying a new electric vehicle. Especially since many new EVs no longer qualify for the full $7,500 EV tax credit in 2024.
But what if you want to buy a used EV in 2024? In that case, the Hertz EV selloff could be good news for you. Buying a used EV can be a good value if you’re committed to EVs, you can charge your vehicle at home, and you want to stop burning gas. Many used EVs qualify for a tax credit of up to $4,000 that you can get at the dealership as an instant rebate.
Bottom line: By selling 20,000 used EVs, Hertz is showing that there are growing pains in the market for electric vehicles. Used EVs might get cheaper in 2024. This can be bad news for people who bought higher-priced new EVs in recent years, because their vehicles might depreciate faster than expected, driving up their cost of car ownership. But more used EVs on the market can be good news for electric vehicle buyers — especially if you buy a used EV that qualifies for up to $4,000 in used EV tax credits. Make sure to shop around for EV auto insurance price quotes before you buy an EV in 2024. The best car insurance companies might quote you a competitive rate to insure your new EV.
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