US rental car firm Hertz has estimated it will lose $US245 million ($AU365.7 million) by offloading 20,000 electric vehicles currently in its fleet – a cost it hopes to offset with cheaper repairs for petrol-powered cars.
Rental car giant Hertz has backtracked on its investment in electric vehicles, announcing it will cut about 20,000 battery-powered cars from its US fleet and replace them with petrol power.
In a quarterly financial report to investors earlier this week, Hertz announced it would soon begin to sell approximately one-third of its circa-60,000 electric cars currently operating in its US rental vehicle fleet.
The US firm’s CEO, Stephen Scherr, cited ongoing costs of repair as the main factor behind the decision, according to CNN Business.
“Collision and damage repairs on an EV [electric vehicle] can often run about twice that associated with a comparable combustion [petrol or diesel] engine vehicle,” Mr Scherr reportedly told analysts.
The publication uncovered a Securities and Exchange Commission (SEC) filing submitted by Hertz which estimated the rental car giant would lose about $US245 million ($AU365.7 million) in depreciation alone on the electric cars it is preparing to sell.
The major loss is attributed to slowing demand for electric cars on the used-car market, especially for Tesla-built vehicles – which are understood to make up almost 80 per cent of the company’s battery-powered fleet.
Tesla has recently been cutting the prices of its new vehicles in the US, encouraging buyers to spend extra and purchase a brand-new electric car rather than used examples.
Mr Scherr also pointed to Tesla’s relatively sparse service network as a factor behind the switch, claiming there is a small parts network and long wait times for damaged vehicles to be repaired.
Hertz had previously targeted electric vehicles to make up more than 25 per cent of its US fleet by 2024, with about 100,000 Teslas and an increasing supply of General Motors models – but neither figure came to fruition.
In Australia, Hertz customers can choose between the Tesla Model Y or Polestar 2 as the company’s only electric vehicles – while other rental brands offer a wider range of battery-powered models.
Hertz Australia has approached for comment on whether the changes to the US business model will affect its local division.
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