In a surprising turn of events, Hertz, the prominent rental giant, is bidding farewell to its electric vehicle (EV) fleet, totaling 20,000 cars, predominantly Teslas. This shift from EVs to gas-powered vehicles comes as Hertz cites high repair costs and lackluster demand for its EV rental offerings.
Impact on Perception and the Second-hand Market
Industry analysts are concerned that Hertz’s decision could cast a shadow over the public’s perception of EV technology. Karl Brauer, an analyst at iSeeCars.com, points out that the move might amplify the existing reluctance of mainstream consumers to embrace EVs, adding a new layer of skepticism.
Repair Costs and Consumer Concerns
One significant factor contributing to the higher costs of maintaining EVs is the lack of expertise and challenges in obtaining replacement parts for these relatively new vehicles. Hertz CEO Stephen Scherr attributed elevated repair costs to damages, particularly on Teslas, and criticized Tesla for not offering discounts on bulk purchases of replacement parts, unlike other automakers.
User Errors and Growing Pains
Scherr revealed that Hertz had imposed limitations on torque and speed for certain EVs, offering them to more experienced users after incidents of front-end collisions with less experienced renters. A survey by Consumer Reports indicates that EVs, both from startups and legacy automakers new to the technology, face more issues than their gas-powered counterparts.
Wider Shifts in the EV Landscape
Hertz’s move highlights broader shifts in the EV landscape, with legacy automakers scaling back production plans amid slowing demand. The growth of EV sales in North America is expected to decelerate from 72% in 2023 to around 27% in the current year, according to Canalys.
Potential Impact on Second-hand Market
Experts predict that Hertz might have to sell its EVs at significant discounts due to higher mileage and visible damages. Scott Case, CEO of EV research firm Recurrent Auto, notes that some Hertz Model 3s show cosmetic wear, potentially influencing the second-hand market, where Tesla prices are already notably lower than their gas-powered counterparts.
Tax Credits and Future Prospects
Despite the challenges, Hertz could benefit from a $4,000 tax credit for certain used EVs under the Inflation Reduction Act. Some experts believe that the high repair costs are a short-term hurdle that will diminish as more EVs hit the roads and infrastructure catches up with the transition.
In essence, Hertz’s decision marks a pivotal moment in the ongoing narrative of the EV industry, highlighting challenges, perceptions, and potential shifts in the market.