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Hertz cuts back on EV purchases
- Thread starter ThomasD
- Start date
shahryaran
Member
I know people who have rented Teslas through Hertz. Presumably a lot of their EVs are Teslas.
The fact that Hertz is talking about their losses due to reductions in MSRP confirms my suspicion that Tesla's strategy of constantly lowering prices has risks. People buy a car with the assumption that there is a certain resale value when they eventually sell. A fleet owner like Hertz that is buying and selling tens of thousands of vehicles all the time is going to be very cold and logical about the full life cycle costs of any ICE vehicle or EV. Resale value is one of the biggest components of that life cycle total cost of ownership.
Yes, lowering MSRP juices the near term numbers. But it also reduces resale value for all existing owners. People who have taken a big hit on resale value are going to be less likely to buy another Tesla if they feel Teslas are uniquely vulnerable to lower resale values because MSRP is more likely to drop than most. I wonder how common it is to have such huge swings in MSRP. I'd never heard about it before buying a Tesla, but that could also be because I never paid attention to the auto industry before this.
The fact that Hertz is talking about their losses due to reductions in MSRP confirms my suspicion that Tesla's strategy of constantly lowering prices has risks. People buy a car with the assumption that there is a certain resale value when they eventually sell. A fleet owner like Hertz that is buying and selling tens of thousands of vehicles all the time is going to be very cold and logical about the full life cycle costs of any ICE vehicle or EV. Resale value is one of the biggest components of that life cycle total cost of ownership.
Yes, lowering MSRP juices the near term numbers. But it also reduces resale value for all existing owners. People who have taken a big hit on resale value are going to be less likely to buy another Tesla if they feel Teslas are uniquely vulnerable to lower resale values because MSRP is more likely to drop than most. I wonder how common it is to have such huge swings in MSRP. I'd never heard about it before buying a Tesla, but that could also be because I never paid attention to the auto industry before this.
I only rent Teslas when I have to rent a vehicle. I usually use Uber but sometimes that isn't practical. Hertz has been great.
Selling EVs to buy gas cars doesn't seem like a good long-term strategy. I suspect there is more here than meets the eye.
Selling EVs to buy gas cars doesn't seem like a good long-term strategy. I suspect there is more here than meets the eye.
This is the issue: "Collision and damage repairs on an EV can often run about twice that associated with a comparable combustion engine vehicle,” Hertz CEO Stephen Scherr said in a recent analyst call.
Hertz isn't saving on fuel costs, and maintenance costs for a relatively new fleet of ICE vs EV probably isn't very different. Tires need replacement more frequently. Basically, it's hurting their bottom line and is a wake-up call for Tesla to address the collision and body repair costs with the cars. Castings and stainless steel bodies are so cool and efficient, but there hasn't been enough work downstream to address the concern that the cars are becoming 'throwaway' vehicles. Bad for insurance rates and bad for rental cars... many consumers can manage with higher insurance rates and cheaper fuel and maintenance though
Hertz isn't saving on fuel costs, and maintenance costs for a relatively new fleet of ICE vs EV probably isn't very different. Tires need replacement more frequently. Basically, it's hurting their bottom line and is a wake-up call for Tesla to address the collision and body repair costs with the cars. Castings and stainless steel bodies are so cool and efficient, but there hasn't been enough work downstream to address the concern that the cars are becoming 'throwaway' vehicles. Bad for insurance rates and bad for rental cars... many consumers can manage with higher insurance rates and cheaper fuel and maintenance though
Watts_Up
Well-Known Member
Maybe also customer were not be informed about using an electric car, in particular using the navigation for
been directed to a Supercharger when needed and often get stranded with an empty battery and been cluless
on how and where to recharge, especially in areas with a low density of Superchargers or even public chargers.
See for example this rental experience summary:
been directed to a Supercharger when needed and often get stranded with an empty battery and been cluless
on how and where to recharge, especially in areas with a low density of Superchargers or even public chargers.
See for example this rental experience summary:
ZenRockGarden
Active Member
The article lacks hard figured, but the biggest issue seems to be high depreciation due to Hertz buying at the top of the market. Repairs due to accidents should be covered by insurance which the rental companies are so eager to sell...
I was also wondering why the renters were not being charged for the repairs.
Early on, Hertz was talking about how much they were saving due to low maintenance costs. Now they've done a 180.
I have a hard time taking this at face value. Having been around similar situations, sometimes its about finding a convenient scapegoat to cover something else going on.
Early on, Hertz was talking about how much they were saving due to low maintenance costs. Now they've done a 180.
I have a hard time taking this at face value. Having been around similar situations, sometimes its about finding a convenient scapegoat to cover something else going on.
zoomer0056
Active Member
There was also a significant increase in resale values during the Covid days. Things go up, things go down. We all wish to have a crystal ball.
Watts_Up
Well-Known Member
Since there is no maintenance compared to an ICE vehicule, except for tires,
why there was a need to sell the car while they were still running fine.
Depreciation is also part of the tax liability, usiness can deduct at least 20% a year on the value of the car.
Absolutly, no cost for the rental company, and even the insurrance would pay for the days when the car could not be rented. So only BS.
ZenRockGarden
Active Member
Most of the cars being sold are up around 80k or 100k miles - I suspect they're pretty worn since people renting cars expect fairly fresh vehicles.
Yeah it feels like execs making excuses, especially when they don't give anything about the details. They bought in huge at the peak of EV prices, used the heck out of them, and are now having to unload and oops prices went way down. Might have been smarter to ease into the market but they wanted to make a big splash. Splashes can be expensive.
I suspect that car insurance purchased by renters is a fixed amount whether EV or not. I also suspect that Hertz is self-insured to a point. I mean they could pay $2 of the $10 per car per day to Allstate for instance. But there is no way that all $10 are going to Allstate.
So if Telsa cost $3 a day and the Toyota Camry costs $2 a day, that is a lost dollar to Hertz and matters to their bottom line.
Also - lost revenue paid by insurance may have limits also. In NC, the statutory amount is 30 days. Many Telsa repairs may take longer and Hertz may need to eat that as I have had to eat the extra rental cost.
I don't think you can blindly write off repair costs (and subsequent insurance costs) because Hertz may have outside insurance. If I owned a fleet of 100,000 cars, I would self insure for collision for sure. Maybe not for liability but collision has a limited risk. And spread that over 100k cars, why would I give Allstate a margin on that?
Liability can be worse so there is probably some element of catastrophic insurance there. But collision - that is easily predictable over 100k cars and a huge profit item at the crazy rates they charge.
Yes - Hertz sells cars after a relatively short time period and resale matters a lot. Still doesn't make much sense to dump them. But they are an old company that does things the way they do them. The old customers like it that way. How are they still relevant? Oh yeah - business renters....
So if Telsa cost $3 a day and the Toyota Camry costs $2 a day, that is a lost dollar to Hertz and matters to their bottom line.
Also - lost revenue paid by insurance may have limits also. In NC, the statutory amount is 30 days. Many Telsa repairs may take longer and Hertz may need to eat that as I have had to eat the extra rental cost.
I don't think you can blindly write off repair costs (and subsequent insurance costs) because Hertz may have outside insurance. If I owned a fleet of 100,000 cars, I would self insure for collision for sure. Maybe not for liability but collision has a limited risk. And spread that over 100k cars, why would I give Allstate a margin on that?
Liability can be worse so there is probably some element of catastrophic insurance there. But collision - that is easily predictable over 100k cars and a huge profit item at the crazy rates they charge.
Yes - Hertz sells cars after a relatively short time period and resale matters a lot. Still doesn't make much sense to dump them. But they are an old company that does things the way they do them. The old customers like it that way. How are they still relevant? Oh yeah - business renters....
In terms of collision repair, Teslas basically only have a "dealership" repair option at Tesla service centers.
For every other OEM, fleet owners can negotiate with independent shops that have access to OEM and cheaper imitation parts.
Being reliant on Tesla to do repairs could make a noticeable cost difference for a fleet that owns tens of thousands of Teslas. Meanwhile, we're just not at the point where independent shops have learned to repair Teslas and have access to imitation parts. Independent shops just aren't an option like they are for ICE vehicles.
Probably has to do with the fact that there aren't enough out-of-warranty Teslas on the road to give independent shops the incentive to learn how to repair Teslas. When a Tesla is still under warranty, people may be hesitant to have work done by independent shops as it might void the warranty. Maybe in a few more years, we'll start seeing independent shops putting out their "Tesla repairs done here" signs.
For every other OEM, fleet owners can negotiate with independent shops that have access to OEM and cheaper imitation parts.
Being reliant on Tesla to do repairs could make a noticeable cost difference for a fleet that owns tens of thousands of Teslas. Meanwhile, we're just not at the point where independent shops have learned to repair Teslas and have access to imitation parts. Independent shops just aren't an option like they are for ICE vehicles.
Probably has to do with the fact that there aren't enough out-of-warranty Teslas on the road to give independent shops the incentive to learn how to repair Teslas. When a Tesla is still under warranty, people may be hesitant to have work done by independent shops as it might void the warranty. Maybe in a few more years, we'll start seeing independent shops putting out their "Tesla repairs done here" signs.
ZenRockGarden
Active Member
Unless Hertz crashed more than half their entire fleet of Teslas, the dominant factor here has simply got to be the depreciation as they bought at peak-EV-prices, drove the fleet hard to 100k miles and are now unloading them at low-tide for pricing cycle
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