Global car rental giant Hertz is hitting the brakes on its ambitious plans to put an EV in every airport after disappointing third quarter results.Despite lower maintenance costs, higher outlays for repairs and lower resale values resulted in lower revenues per day. The company also reported a lack of charging infrastructure and pace of OEM parts.“The capabilities to manage an EV fleet are not learned overnight,” CEO Stephen Scherr told analysts on a conference call.“While conventional maintenance on electric vehicles remained lower relative to comparable ICE vehicles in Q3, higher collision and damage repairs on EVs continue to weigh on our results.”.Although EVs don’t need oil changes, spark plugs or even transmission fluid, collision and damage repairs are often twice as much as with a conventional gasoline-powered car. EVs are also heavier and require more frequent tire changes, brake service and suspension repair.Earlier this year Hertz announced EVs made up about 11% of its global fleet. It had originally planned to have about 25% by the end of next year.In 2021, it ordered 100,000 Teslas along with another 240,000 EVs from GM and Polestar and had taken delivery of about 35,000 to the end of the quarter. In May it partnered with ride-sharing service Uber to provide its drivers with contract rentals at lower rates, including insurance and maintenance.It was those Uber rentals that ended up with “higher incidents of damage,” it reported..“We are working hard to re-underwrite the drivers that we’re putting into these cars, particularly in our ride-share business,” Scherr said. “We’re looking for more experienced drivers, longer length of keep, where the incidence of damage goes down.”To compensate, it's moved a higher portion of those vehicles into the ‘leisure’ segment which saturated the market and drove down rates.In addition, Tesla has been cutting prices in a battle with other EV manufacturers such as Ford which in turn has lowered the resale values Hertz expected to recoup when the cars were eventually sold off.Nonetheless, Hertz said it is still moving ahead with its EV plans, albeit at a slower pace than it originally envisioned.“We believe there is substantial upside opportunity to grow margins and cash flows as we work through the EV headwinds,” Scherr said. “We nonetheless remain committed to our long-term strategy to electrify the fleet.”
Global car rental giant Hertz is hitting the brakes on its ambitious plans to put an EV in every airport after disappointing third quarter results.Despite lower maintenance costs, higher outlays for repairs and lower resale values resulted in lower revenues per day. The company also reported a lack of charging infrastructure and pace of OEM parts.“The capabilities to manage an EV fleet are not learned overnight,” CEO Stephen Scherr told analysts on a conference call.“While conventional maintenance on electric vehicles remained lower relative to comparable ICE vehicles in Q3, higher collision and damage repairs on EVs continue to weigh on our results.”.Although EVs don’t need oil changes, spark plugs or even transmission fluid, collision and damage repairs are often twice as much as with a conventional gasoline-powered car. EVs are also heavier and require more frequent tire changes, brake service and suspension repair.Earlier this year Hertz announced EVs made up about 11% of its global fleet. It had originally planned to have about 25% by the end of next year.In 2021, it ordered 100,000 Teslas along with another 240,000 EVs from GM and Polestar and had taken delivery of about 35,000 to the end of the quarter. In May it partnered with ride-sharing service Uber to provide its drivers with contract rentals at lower rates, including insurance and maintenance.It was those Uber rentals that ended up with “higher incidents of damage,” it reported..“We are working hard to re-underwrite the drivers that we’re putting into these cars, particularly in our ride-share business,” Scherr said. “We’re looking for more experienced drivers, longer length of keep, where the incidence of damage goes down.”To compensate, it's moved a higher portion of those vehicles into the ‘leisure’ segment which saturated the market and drove down rates.In addition, Tesla has been cutting prices in a battle with other EV manufacturers such as Ford which in turn has lowered the resale values Hertz expected to recoup when the cars were eventually sold off.Nonetheless, Hertz said it is still moving ahead with its EV plans, albeit at a slower pace than it originally envisioned.“We believe there is substantial upside opportunity to grow margins and cash flows as we work through the EV headwinds,” Scherr said. “We nonetheless remain committed to our long-term strategy to electrify the fleet.”
