A Hertz Tesla electric vehicle is displayed during the Hertz Corporation IPO at the Nasdaq Market site in Times Square in New York City, U.S., November 9, 2021.
Brendan Mcdermid | Reuters
Hertz surprised many onlookers last week when the car-rental company announced it would be selling about a third of its global electric vehicle fleet, reversing course on several big bets it had placed on EVs.
The move seemingly followed the rest of the auto industry, which has quickly shifted its position on EVs after years of aggressive plans and projections, with several automakers cutting production of vehicles or reducing prices as inventory has built up in recent months.
In October, General Motors and Honda Motor announced that they were canceling plans to jointly develop affordable EVs in the face of slowing demand. Over the course of 2023, Tesla cut the prices of its cars across the world, aiming to reignite demand as consumer spending slowed and the EV market became even more crowded.
Hertz CEO Stephen Scherr told CNBC’s Jim Cramer on “Squawk on the Street” on Thursday that the company’s move, which followed large purchase orders of Tesla and GM EVs, was “responding to the reality, which is we’re trying to bring supply in line with demand.”
“The reality of EVs and Tesla’s being the best-selling car will, at some point, render them the best rental car,” Scherr said. “It’s not yet, so we may have been ahead of ourselves in the context of how quickly that will happen, but that will happen.”
Hertz said it would be selling about 20,000 electric vehicles. It would then use some of those proceeds to buy internal combustion engine cars. The company would also be taking a $245 million incremental net depreciation expense as a result.
However, Hertz said in a regulatory filing that it expects to improve its bottom line by an amount equal to $245 million over the next two years by replacing those EVs with internal-combustion-engine cars.
The company had already indicated on its…
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