Going green Hertz: Rental giant axes third of EV fleet over lack of demand
- Reference: 1705073414
- News link: https://www.theregister.co.uk/2024/01/12/hertz_electric_vehicle_cuts/
- Source link:
Approximately 20,000 EVs are to be offloaded from its US fleet throughout 2024, and the company plans to spend at least a portion of the proceeds buying internal combustion engine (ICE) vehicles "to meet customer demand."
The decision was revealed in a [1]filing made with the US Securities and Exchange Commission (SEC) [PDF] and reflects low demand from customers coupled with lower margin rentals and "damage expense associated with EVs."
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Hertz expects to take a hit to the tune of $245 million due to incremental net depreciation expense related to the sale.
[3]
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While Hertz emphasized plans to improve profitability of the remaining EV fleet, with initiatives including expanding EV charging infrastructure and making deals with manufacturers around access and parts and labor, it's hard to see the decision as anything other than an abrupt about-face by a company that a mere two years ago amplified its intent to buy 100,000 cars from Tesla, along with thousands more from other EV makers.
It seems likely that Tesla's [5]recent price cuts have resulted in alarming levels of depreciation, which, combined with the cost of fixing the vehicles, have played a part in Hertz's decision. That, and the fact the buyers have been staying away from EVs in their droves, [6]according to an open letter from thousands of US auto dealers.
[7]Kia crashes CES with modular electric vehicle concept
[8]Welcome to 2024: Volkswagen really is putting ChatGPT into cars as a gabby copilot
[9]New cars bought in the UK must be zero emission by 2035 – it's the law
[10]Tesla says California's Autopilot action violates its free speech rights
Lack of demand could also be attributed to concerns regarding the US's charging infrastructure. Range anxiety continues to represent a barrier, and although the US Biden-Harris administration [11]announced $623 million in grants to build out a charging network, the goal of at least 500,000 publicly available chargers is only scheduled for 2030 and will do little to assuage current worries.
[12]According to the Office of Energy and Renewable Energy, there are only 140,000 publicly available chargers in the US.
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The Register asked Hertz for more detail on the reasons behind its decision and will update should the company respond.
The US is not alone in encountering bumps on the road to EV adoption. [14]According to the UK's Society of Motor Manufacturers and Traders (SMMT), while sales volume of battery electric vehicles (BEVs) reached record highs, their market share has slipped slightly to 16.5 per cent.
SMMT observed that although the market share for BEVs had dipped a little, UK sales of mild hybrid electric vehicles (MEVs) and plug-in hybrid electric vehicles (PHEVs) were surging. It is also worth noting that SMMT recorded a larger drop in the market share of petrol and diesel vehicles.
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As the law stands today, all new cars bought in the UK [16]must be zero emission by 2035 . ®
Get our [17]Tech Resources
[1] https://hertz.gcs-web.com/static-files/402bfe0c-04e9-455d-af2f-69645c3728f1
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2ZaFwNekNA7D89yBABjvb7QAAANU&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZaFwNekNA7D89yBABjvb7QAAANU&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZaFwNekNA7D89yBABjvb7QAAANU&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[5] https://www.theregister.com/2023/01/09/china_tesla_price_cuts/
[6] https://www.theregister.com/2023/11/29/ev_car_dealers_biden/
[7] https://www.theregister.com/2024/01/10/kia_modular_evs/
[8] https://www.theregister.com/2024/01/09/volkswagen_deloitte/
[9] https://www.theregister.com/2024/01/04/new_cars_ev_2035/
[10] https://www.theregister.com/2023/12/11/tesla_california_autopilot_lawsuit/
[11] https://www.transportation.gov/briefing-room/biden-harris-administration-announces-623-million-grants-continue-building-out
[12] https://www.energy.gov/eere/vehicles/articles/fotw-1299-july-17-2023-number-electric-vehicle-charging-ports-us-nearly
[13] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZaFwNekNA7D89yBABjvb7QAAANU&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[14] https://twitter.com/SMMT/status/1745749314985447879
[15] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZaFwNekNA7D89yBABjvb7QAAANU&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[16] https://www.theregister.com/2024/01/04/new_cars_ev_2035/
[17] https://whitepapers.theregister.com/
The problem with EVs for rentals....
Whenever I have rented a car, I've generally been doing significant mileage (else I'd just take an Uber), often in places I am not familiar with. The limited range of EVs, charging time and potential worries about finding charging mean they're less well suited to most rental cases. So it doesn't surprise me Hertz's decision to go big on EVs hasn't worked out.
I am not an EV hater, in fact, I am a happy EV owner. But at home, we generally don't do many long trips, we know where chargers are if we need them, and we generally charge at home where there is a cost saving. Most rentals are business trips, so the main advantage of cost savings isn't going to be a big factor if your company picks up the bill.
Re: The problem with EVs for rentals....
Hertz didn't help themselves by requiring a vehicle to be returned charged or face hefty charging fees, plus a base payment. When I'm on a trip, sitting around to charge up a vehicle (close enough to the return location, no less) is costing me and/or my employer not insignificant amounts of money.
Re: The problem with EVs for rentals....
EVs work great for reducing the maintenance costs for rental companies, but repair costs (and times) are much higher. I live in fear of someone crashing into my Tesla because it might take 3 months to get it fixed; same for Hertz I imagine - no income from the car until its rentable again.
Hertz did a crappy job in the EV marketing. They could have had chargers onsite that you could return your rental to, and then it can charge on their time whilst they prep it for the next. They could've provided some integration with their app to educate the renter on the EV, and maybe even act as a key/lock as they do for gas. Outside of the "must return with 80%" rule there was no info on using Tesla's supercharging network. I'm pretty sure we never got charged for supercharging costs before returning it on the one rental we did. I didn't know if it would passthrough, or they'd be a markup like on the tolling.
Re: The problem with EVs for rentals....
I knew about the high risk of writing off a Tesla for a minor bump but I had no idea it could get that bad on repairs.
Re: The problem with EVs for rentals....
Really?? So they couldn't slow charge them at low cost while they wait to be cleaned and checked?
I can understand not wanting to faff about with fuel.
I made the fatal mistake of not completely checking out my last hire car cos we'd landed late and wanted to have some non-plane food and get to the hotel. Turned out that both front wiper blades were toast. Didn't discover this until a week into the trip and 600 miles from where we started.
A good way to ruin a vacation
A buddy of mine rented one. On 240v with the supplied charger, he was knocking down 10% per hour. That is the better part of a day to refill a depleted battery. He literally had to structure his vacation around charge times. Sure he could charge overnight at the AirBNB (he paid them extra), but the drive back to the airport drained much of that.
As for routinely using an AirBNB for vehicle charging while traveling...that seems a bit disingenuous for the purpose of the accommodations. Kind of like stealing the gas out of the AirBNB's lawnmower for use in the renter's ICE vehicle.
This is not terribly surprising. Most of the cases where I would rent a car are also cases where I'm unlikely to want to use a BEV.
The first one that comes to mind is when I'm on holiday touring a foreign country. In that scenario, I'm probably going to drive quite a bit, I'm not familiar with the local charging infrastructure, and I usually won't sleep at a place where I can charge overnight.
The second one is where I'm flying somewhere for work. In that scenario, I won't necessarily have to drive a lot, but I'll still be unfamiliar with the local charging infrastructure, I'll be generally short on time, and I'll be unlikely to be able to charge at destination.
By comparison, nearly all of my usual driving needs can be met by a BEV. I can very easily see myself buying a BEV but renting ICEs. That sounds reasonable.