Unexpected: Auto rental giant Hertz has announced plans to sell off about one-third of its global electric vehicle fleet and use a portion of the proceeds to purchase vehicles with internal combustion engines to fill the gaps. Hertz announced the strategic move in a recent filing with the US Securities and Exchange Commission, noting the sale would impact multiple makes and models of EVs from its US fleet.
Electrics marked for sale will continue to be eligible for rental during the sales process, the company added.
Hertz believes the move will eliminate a number of lower margin rentals and reduce expenses related to costly collision and damage repairs.
That said, Hertz isn’t totally abandoning EVs. The rental agency reiterated plans to continue to improve the profitability of its remaining EV fleet including expanding charging infrastructure and growing relationships with electric vehicle makers in hopes of securing more affordable access to parts and labor.
Hertz said it expects approximately $245 million of incremental net depreciation expense related to the sale. Share value in the company is down 3.8 percent on the news as of this writing.
The fact that Hertz is selling off some of its fleet isn’t surprising, but replacing them with ICE vehicles is. The auto industry and associated players have been gung-ho about pushing the electric vehicle initiative for a few years now. To see a company of this size pump the brakes and flip a U-turn wasn’t expected.
Now that it has happened, will it set precedent for others to follow suit? It’s hard to say. EVs certainly have their advantages but as Hertz has demonstrated, they may not be right for all situations – at least, not yet. Or maybe Hertz just went too heavy, too fast with its EV investment.
On a side note, EVs could benefit greatly from something like a major battery advancement or some other breakthrough that drastically reduces cost and / or improves range, but we’re still waiting for it to materialize.
Image credit: Upgraded Points, Luca Merz
