Electric vehicles offer some great benefits over combustion-powered cars and trucks. Greatly reduced maintenance, zero tailpipe emissions, instant off-the-line torque, and the ability to recharge right at home are but a few of the upsides EVs provide. Despite these advantages, though, electrics are still not a perfect transportation solution, far from it, in fact, as Hertz has come to learn the hard way.
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How Buying A Tesla From Hertz Could Be The Bargain Of The Decade
Used Teslas from Hertz are selling for well under $20,000, with renters getting special offers for even less.
High Hopes And Celebrity Appeal
Back in late 2021, the massive car rental company made some waves. Capitalizing on the red-hot popularity of Tesla electric vehicles, the firm announced that by the end of 2022, it planned to place an initial order for 100,000 Musk-mobiles, a deal worth some $4.2 billion. In theory, this would give customers access to the latest and greatest technology as well as the ability drive something a little greener than your typical rental car. Hertz even enlisted entrepreneur and seven-time Super Bowl winner Tom Brady to help spread the word.
At the time, the famous football player said Hertz “is changing the game when it comes to the future of mobility.” Brady also added, “I’ve been driving an EV for years, and knowing Hertz is leading the way with their electric fleet speaks to how the world is changing and the way companies are approaching being environmentally and socially conscious.”
Despite the popularity of Teslas, the big push to go green, and a solid celebrity endorsement, Hertz’s high hopes were dashed. The company’s big investment in Tesla vehicles ended up leading to some staggering financial losses.
The Trouble With Teslas
Unfortunately, this gamble didn’t end up paying off for Hertz. The company had a GAAP net loss of $2.9 billion in 2024 or $9.34 per diluted share. Reportedly, this financial bloodbath is because Hertz has completed selling off some 30,000 electric vehicles from its fleet, an action that was announced back in 2023.
The rapid depreciation of Tesla vehicles is largely responsible for these losses. According to a report from TheStreet.com, these cars, which were mostly Model 3 sedans “accelerated past the point where Hertz saw them as virtually worthless much faster than they anticipated.” Also, customers were leery of renting them in the first place, likely because of unfamiliarity, and America’s questionable public charging network.
A Steep Downfall Ever Since
In the fourth quarter of 2023, the company lost $245 million on the sale of EVs as Hertz worked to reduce its fleet of battery-powered vehicles. Additionally, according to the latest financial report, the rental company’s “adjusted corporate EBITDA loss narrowed year over year in the fourth quarter to negative $357 million.”
During Hertz’s recent earnings call, Gil West, the CEO said, “Our transformative fleet rotation is well underway. As of year-end 2024, over 60% of our fleet was comprised of vehicles one year old or less. And we remain on track to substantially complete our fleet rotation by year-end 2025.” Specifically addressing electrics, West noted, “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.” This indicates the company will continue to work with electrics, but only in a limited scope.
Hertz’s financial woes aren’t over just yet, though. As chief financial officer Scott Haralson said during the earning calls, “Overall, Q4 depreciation was clouded by the sale of vehicles, and it is likely this will continue into Q1 a bit as we continue to accelerate our fleet rotation.”
This is unfortunate news for Hertz and the broader EV world. Electric vehicles have been struggling in the U.S. for a number of years despite the billions of dollars invested by car companies.
