A Hertz EV test-drive event in Los Angeles just last July. (Getty Images)
Electric vehicles were already considered unappealing by a piece of the car-buying public. Now their image could take one other hit as rental giant Hertz dumps 20,000 of them, mainly Teslas, for gas-powered cars.
Hertz, the biggest U.S. fleet operator of EVs, has blamed the sale on high repair costs and weak demand for the vehicles it offers on rent.
Analysts and industry experts consider the move will affect the second-hand marketplace for EVs and dissuade buyers who’re already rethinking big purchases as a consequence of higher borrowing costs.
“The larger impact of Hertz EV fire sale is the perception hit to the technology,” said Karl Brauer, analyst at used-car aggregator iSeeCars.com.
“Mainstream consumers are already hesitant to purchase an EV, and this news only supports their concerns.”
The upper costs related to repairing EVs stem from an absence of sufficient expertise in coping with such vehicles and challenges in getting the substitute parts as they’re still very latest, industry experts said.
Hertz CEO Stephen Scherr flagged elevated costs attributable to damages to certain EVs, particularly Teslas, last 12 months at a conference. In announcing the liquidation of Hertz’s EV fleet, Scherr also blamed the high repair costs on Tesla for not offering to discount bulk purchases of substitute parts the best way other automakers do.
Tesla and Polestar, whose cars are popular with automobile rental firms, didn’t reply to a request for comment. Automotive rental firms Avis and Enterprise also didn’t reply to a question on their EV strategy.
User errors
CEO Scherr said Hertz limited the torque and speed on the EVs and offered them to more experienced users to make sure easier rides after certain renters had front-end collisions.
Growing pains for startups and legacy automakers which can be latest to the technology also mean that EVs have been facing more problems than gas-powered cars, in response to a survey last 12 months by nonprofit Consumer Reports.
The survey, covering owner responses on greater than 330,000 vehicles, showed that EVs from the past three years had 79% more problems than conventional cars.
For a lot of EVs, there isn’t any solution to repair or assess even barely damaged battery packs after accidents, which forces insurance firms to write down off the cars with a couple of miles — resulting in higher premiums and undercutting gains from going electric.
German rental firm SIXT said on Tuesday it signed a multi-billion-euro take care of Stellantis to purchase as much as 1 / 4 of 1,000,000 vehicles.
The deal will even see Stellantis provide some EVs to the German mobility service provider, but the businesses didn’t offer further details.
Hertz’ move underscores a wider shift within the EV landscape.
After pledging billions of dollars for his or her EV ambitions in recent times, legacy automakers have pulled back their production plans as demand slows.
EV sales growth in North America is anticipated to slow to about 27% this 12 months from a scorching 72% in 2023, in response to market research firm Canalys.
Cut-rate prices
Hertz could have to get rid of the EVs at hefty discounts as a consequence of the upper miles they’ve covered in addition to visible damage reminiscent of nicks, scratches and dents, in response to experts.
“Having rented several Model 3s from Hertz over the past six months, my statement is a few of them are cosmetically pretty rough,” said Scott Case, CEO of EV research firm Recurrent Auto.
Nearly the entire greater than 500 used EVs the corporate currently has on sale are Teslas, with some Model 3 compact sedans being listed for as little as $21,000 — half the value of a brand new automobile and as much as $10,000 lower than cars of comparable mileage at other sellers.
Such a cut-price sale would likely reverberate across the second-hand market of EVs, which already command a lower cost than conventional used cars.
The worth of used EVs has dropped 33.7% between October 2022 and October 2023, whilst the general used automobile market dropped only 5.1%, in response to data from iSeeCars.
Hertz could, nevertheless, profit from the $4,000 tax credit for some used EVs under the Inflation Reduction Act, which brings down the value of some vehicles it’s attempting to sell well below many gas-powered cars.
Some experts also said the high repair costs of EVs are a short-term challenge that comes with any technology and can ease as more of those vehicles hit the road.
“The infrastructure has to meet up with the transition, and that may bring the costs down,” said Lynne McChristian, director of the Office of Risk Management and Insurance Research on the University of Illinois.
This Article First Appeared At www.autoblog.com
