Featured Hertz pulls back on EV plans citing Tesla price cuts, high repair costs

Hertz needed to do more upfront to provide a better first-time EV driver experience anyway. They bit off more than they could chew... too much, too quickly.

With regard to assets, the situation is a mess. All those fleet purchases gave false impression of Tesla consumer market growth, when unit count was really just business related... a struggle to keep BYD from seizing too much control. Now, Hertz is stuck with devalued vehicles. Making matters worse is rollout of Highland... a better Model 3, which will impact used prices even further.

Finally, adoption of NACS by everyone else and spread of MagicDock really takes away from the biggest advantage Tesla had in North America... which complicates Hertz rentals, since Superchargers will be used more. Remember, renters must return the vehicle with 80% charge. That means staying there longer than the usual Tesla owner session.

Market growth beyond the early-adopter stage is now revealing challenges those wearing rose-colored glasses dismissed, labeling sources who raised concern as anti-EV. Automotive sales are proving not as simplistic as production-focused narratives claimed.

 

The drop in resale value is because Tesla has lowered the price on new cars. Only bad news for those flipping cars.

Hertz repair costs aren't illustrative of private users. Most of their EVs are going out through a rideshare program where Uber and Lyft drivers abuse them.

 

Renting an EV vehicle to a non-EV owner is gonna have lots of expensive hassles... I mean customer service with high voltage in cars is a nasty place with lots of dumb moves...

But on the bright side, this news and news of decline in sales in EVs in general now that all the rich people have bought them and the poor people can't afford them means Toyota is now gloating about how their fossil fool loyalty is a superior business plan... And maybe that's true very briefly, but I doubt it will be true in the long run.

 

If they had ordinary business and vacation renters demanding them, expansion would make sense. But that's exactly what they don't have enough of.

 

And if the experience was bad, odds are they won't ever try an EV rental again.

 

Really, you do as much abuse to your car as a full time Uber that see two, three, four, or more times the miles you do?

I included the Leadfoot quote because he was literally just in a rideshare making use of such a program from a rental company. The driver said once the battery got low, they would just swap it out for another. Even at Level 2 charging, such regular deep discharging isn't good for a battery.

But it doesn't appear to just be wear and tear leading to these costs.
"Hertz said it tried to mitigate “higher incidents of damage among EV rideshare drivers” by siphoning some of its fleet into its leisure segment. But that didn’t work out as well as the company hoped." - The Verge
The phrasing means it is more than wear and tear issues. These are also crash repairs. With 80% of their EVs being Teslas, they are likely running into part supply issues. Even if the part and repair isn't costly, longer out of commissions times mean less income from renting. Which becomes a problem with the non-Uber side of the business. Typical renters unfamiliar with EVs simply don't want to deal with one at this time.

Despite what the headlines might say, Hertz isn't cancelling orders for EVs, "Despite the delays and changed calculations, the company says it is sticking to its plan to fleet 100,000 electric cars from Tesla and 175,000 from GM. However, Hertz will not achieve its previous goal of having electric vehicles makeup more than a quarter of its fleet by the end of 2024." - https://www.electrive.com/2023/10/27/hertz-slows-down-on-ev-plans/ It also includes 65,000 Polestars.

 

Yes the price cuts are disaster to the bean counter. And down time likewise.

A weekend rental from Hertz of a MY led my oldest son to buy one.

And do you really suppose that an order for Hertz quantities is priced at MSRP?

My son bought his when a accident running over a ladder in a Prius plug in totaled his car after 5 weeks. Can happen to any car. Only one I ever totaled was a Porsche that ran into the back of a truck (my fault, blinded by the sun). Truck had near zero damage, Porsche they stopped counting at 28k which was more than it was worth. I thought it was a $3-4k repair. So complicated cars do cost more.

 

No one would have. In fact, it is absurd to even suggest that. Hertz most likely didn't get as much of a discount as price-cuts though, nor would Hertz have planned on such rapid resale deterioration.

 

So August 2023, I bought a 57,000 mi, 2017 BMW i3-REx for $15,000 and rapidly drove to the border. My previous 6,000 mi, 2014 BMW i3-REx cost $29,000 in May 2016. So why:

• Traction battery 'field measured' ~27 kWh battery out of 28.3 kWh new, 95% capacity.
• Backup for Tesla whose replacement battery would run $15,000.
• Eligible for a $4,000 used EV credit.

Prices change for a lot a reasons and if the new ones have more capabilities and cost less ... EXCELLENT! There is a used EV tax credit, $4,000.

This means a used EV from Hertz may be cheaper than a new Tesla..

Bob Wilson

 

every time someone posts thst used tesla prices are tanking, i challenge the to show me. i spent all summer and fall looking for a reasonably priced used M3.
new is 31k after tax credits, so i expected a tanking used price to be substantially lower, and i could not find one.

 

"nikhil naikal, owner of kinetic said, electric vehicles can be 1,000 pounds heavier than gas. and they are zippierand heavier. it's just physics.
it's going to affect tires, suspension, steering columns, brakes."

brakes on an ev? really?

 

And I just visited the Hertz web site and looked at 121 available MYs

https://www.hertzcarsales.com/raleigh/used-cars.htm?defaultRange=5&make=Tesla&model=Model%20Y&geoZip=27330&geoRadius=0

$52-57k no haggle prices. LR one in my color had 48k miles on it.

What are they smoking?

Lots of 3s available, several thousand.

 

Teslas are constructed with lightweight large and expansive dies and steel and aluminum pressings.

Extensive rough service over many miles of rough treatment by customers means that these structures are subjected to extensive repeated stress. Bolt on components are simple and easy to replaces. Stress cracks and failure on body components, not so easy.

Repairs of damage for accidental crashes are likewise complicated and expensive, even if partial panels are available.

 

does anyone want to talk about what happened to used pip prices when toyota offered $5,000. rebates on top of tax credits for phevs?
markets fluctuate

 

There is evidently no "right to repair" with Teslas, so there is no industry wide independent innovation relating to Tesla products outside of accessories. That's why the proprietary protective architecture of the early Apple personal computers almost led to the demise of Apple when compared to the competition of IBM based PC's.

 

Since the market wasn't saturated with them and the credit was less, they didn't face the same situation.

 

All I know is that when the Prime came out I almost could have had one for as little as $18,000 with the federal tax credit and the Colorado state incentive. I tried to get one as a replacement for the Leaf. The trick was I had to buy one from off the East Coast where they were cheaper. I also was going to have to borrow money for the incentives until I got those back when I did my taxes the next year.

The main reason I didn't get one was I figured out I wouldn't get half the federal tax credit, so that was going to up the price to over $20,000. I settled for a used Avalon hybrid for around $15,000 instead.

TBH the car market has me confused. I think it's best if I stopped looking at cars and prices until I actually need a car. Who knows how much demand there is for EV's. I like EV's, but that's just me. Well, me and my wife, the wife says the less-than-84-mile Leaf was her favorite car. We are possibly going to Texas for a week and I was thinking of renting an EV of some sort, if available and not too costly.

 

Having read the biography of Elon Musk, he well remembers the 2009 banking fiasco. Recall that banking deregulation let banks move substantial parts of their reserves into 'credit default' mortgages, the junk-bonds of mortgages, to inflate their apparent reserves. Then a financial chill made those junk mortgages into useless paper. The 2018 bank deregulation bill has done the same. In 2009, Tesla was about to fail payroll due to the 2009 regulation failure.

Elon's price cuts are driven in large part to making sure Tesla has the liquidity and absence of debt to go through another "2009." Fortunately, his focus on efficient engineering and manufacturing means Tesla is able to take these cuts and remain cash positive. Other manufacturers with less compelling products don't have that reserve.

Bob Wilson