Hertz, the rental car company, made headlines with its plans to purchase 100,000 Tesla Model 3 sedans and 65,000 Polestars for its fleet. However, a recent SEC filing revealed that Hertz will be selling 20,000 of its electric vehicles (EVs) and replacing them with fossil fuel–powered vehicles. This decision marks a significant shift from the company’s initial EV strategy and raises questions about the challenges of introducing new products to the market.
Key Takeaway
Hertz’s decision to sell a portion of its EVs reflects the complexities and challenges of integrating electric vehicles into the ride-share market, highlighting the importance of thorough market assessment and product introduction strategies for businesses.
EV Transition Stumble
Hertz’s move to sell a portion of its EVs underscores the complexities of transitioning to electric vehicles, especially in the ride-share sector. Initially, Hertz directed a majority of its EVs to Uber drivers, aligning with Uber’s efforts to promote EV adoption among its drivers. The allure of lower operating costs and longer rental periods seemed promising for Hertz. CEO Stephen Scherr highlighted the potential of EVs in the ride-share market during the company’s Q3 earnings call, emphasizing the growing importance of electrification in the industry.
Unforeseen Challenges
While EVs offered advantages such as reduced maintenance costs and higher rental prices, Hertz encountered unanticipated obstacles. The cost of repairing collision damage on EVs, particularly Teslas, exceeded expectations. This issue, compounded by the relative novelty of EVs in the market, resulted in higher repair expenses. The lack of extensive experience with repairing EVs, compared to traditional gas-powered vehicles, contributed to the increased costs and operational challenges for Hertz.
