Hertz Global Holdings (NASDAQ: HTZ) is employing a unique strategy to mitigate ongoing losses in its electric vehicle fleet. The rental giant is offering its customers the option to purchase their rental EVs at deeply discounted rates, signaling an accelerated effort to offload inventory and shrink its fleet of depreciating EVs.
Hertz has been contacting customers who rent EVs with offers to buy their vehicles at attractive prices. One Reddit user shared that they were offered a 2023 Tesla Model 3 with 30,000 miles for $17,913. Other renters have reported similar offers, including $18,442 for a 2023 Chevy Bolt and $28,500 for a Polestar 2. Vehicles purchased through this program come with a limited 12-month, 12,000-mile powertrain warranty and a buy-back option within seven days or 250 miles.
The strategy isn’t entirely new for Hertz, which has historically directed its rental customers to its sales channels.
“By connecting our rental customers who opt into our emails to our sales channels, we’re not only building awareness of the fact that we sell cars but also offering a unique opportunity to someone who may be in the market for the same car they have on rent,” said Hertz Communications Director Jamie Line.
The financial urgency driving this program is clear. Hertz reported depreciation losses of $937 million in the third quarter of 2024, a reflection of the challenges in managing its EV inventory.
Hertz initially aimed to lead the rental industry’s shift to electrification with major investments in Tesla, Polestar, and General Motors EVs. However, difficulties in scaling the program have led the company to revise its goals. Customer demand for EV rentals has lagged expectations, particularly outside urban areas with strong charging infrastructure. Maintenance challenges with certain models, like the Tesla Model 3, have further complicated operations.
In February 2024, Hertz announced it would no longer purchase Polestar 2 vehicles. Around the same time, the company began selling 30,000 Teslas from its rental fleet. These moves reflect a broader effort to recalibrate its EV strategy.
For renters, Hertz’s offers present an opportunity to purchase EVs at below-market prices, often after a trial period through renting. While the approach aligns with Hertz’s traditional practices of selling used rental vehicles, the emphasis on EVs is noteworthy given the unique challenges associated with their depreciation.
The program’s emergence highlights the financial strain caused by the depreciation of Hertz’s EV fleet, an issue affecting the wider automotive industry. EVs often face steeper depreciation curves due to rapid advancements in technology and concerns about long-term battery health.
“While this strategy isn’t exactly new for Hertz (or rental companies in general) — it’s clear that ongoing depreciation losses ($937 million in Q3) are fueling an acceleration to shrink their — once ambitious EV fleet — as fast as possible,” commented Car Dealership Guy on social media.
Hertz’s pivot away from its original electrification ambitions raises questions about the broader feasibility of scaling EV fleets in the rental industry. For now, the company’s approach to converting rentals into sales could serve as a model for managing inventory in a rapidly evolving market.
Information for this story was found via The Verge and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
