In a cautionary tale of “green” ambitions gone awry, Hertz is reportedly offloading tens of thousands of electric vehicles (EVs) from its fleet after enduring massive financial losses. The rental car giant, once heralded by the Biden administration for its “go green” initiative, is now facing the harsh realities of a market that doesn’t live up to its eco-friendly promises.
Hertz’s troubles stem largely from the decision to invest heavily in EVs, particularly the purchase of 100,000 Tesla Model 3s in 2021. At the time, the company touted the move as a step toward reduced maintenance costs and consumer excitement for electric travel. However, the rosy forecasts have proven far from reality, as Hertz now grapples with spiraling depreciation costs and mounting repair bills.
The numbers are grim: depreciation costs for Hertz’s EVs skyrocketed by 89% this year, averaging a staggering $537 per vehicle per month. This financial strain has forced the company to sell off approximately 30,000 electric vehicles by the end of 2024. Some used Tesla Model 3s from Hertz’s fleet are reportedly hitting the market for under $20,000, a stark indicator of how far the company’s EV experiment has fallen short.
One major factor accelerating Hertz’s losses has been Tesla’s repeated price cuts, which have slashed the resale value of EVs in the used car market. These price drops, combined with unexpected maintenance and repair expenses, have turned what was once seen as a forward-thinking investment into a financial albatross.
Stephen Scherr, Hertz’s former CEO, resigned earlier this year amid the fallout. His departure followed the company’s decision to pivot away from its aggressive EV expansion. Scherr cited the exorbitant repair costs associated with EVs, revealing that collision and damage expenses for electric cars often run double that of traditional internal combustion engine vehicles.
Hertz’s woes are especially embarrassing considering the fanfare with which its EV program was launched. In 2021, the Biden-Harris administration praised the company’s green efforts, highlighting Hertz as a model for sustainability. The company even boasted on social media about its recognition from the White House, proclaiming its commitment to “expand access to electric vehicles across the country.”
Yet the disconnect between political accolades and economic reality has become glaring. While Hertz initially framed its EV initiative as a win for customers and the environment, the financial repercussions have forced the company to backpedal.
This debacle serves as a stark reminder of the pitfalls of rushing into politically driven “green” initiatives without fully accounting for market dynamics and economic feasibility. Hertz’s struggle mirrors broader issues in the EV market, where lofty promises often clash with the practical challenges of affordability, maintenance, and infrastructure.
As Hertz sells off its electric fleet and reconsiders its future strategy, one thing is clear: the road to profitability won’t be paved with government praise and wishful thinking. For Hertz and other companies lured by the siren song of “green” policies, this is a wake-up call that reality always wins in the end.
