Sky-High Depreciation and Repair Bills Force Hertz to Sell 30k EVs

https://jalopnik.com/sky-high-depreciation-and-massive-repair-bills-force-he-1851447937

by t23 • 2 years ago

6 3 2 years ago

afavour• 2 years ago

Disappointed to see the end of the era where I could reliably rent an EV from Hertz at nearly half the cost of a gas car. Personally I was more than happy to deal with the inconvenience of charging for that level of discount, but it was clearly not sticking around long term.

It was good advertising for EV brands though. I’d never heard of “Polestar” before I was offered a discount rental, walked away very impressed with it.

mcphage• 2 years ago

The issue with repair costs I understand, but having to sell due to depreciation seems backwards. Selling cars because they're not worth as much to sell seems to run contrary to Hertz's primary business, which is renting those cars out to people to drive. You can't make money renting out cars if you sell those cars first.

gnat• 2 years ago

Depreciation is triggered by the tumbling EV prices. Hertz isn’t just making money from rentals, each car is an asset that will be sold after a few years for a lower price than it was bought for.

As EV manufacturers drive prices down through competition, Hertz is having to constantly revise its expectations for how much the cars will be worth at the end of their rental life. That shows up as depreciation.

Each time they revise down their expectations, they’re forced to acknowledge that they’ll make less money from these cars than they thought, and they’re forced to accept that it was not as good an idea as they originally thought.

At some point management says “stop pouring bad money after good, don’t buy any more EVs” and that’s strongly connected to “if the ones we have are losing value faster than expected AND costing more to maintain, get rid of them so we stop burning cash”. That’s why they’re stopping altogether.

Doesn’t mean EVs won’t come back as a rental car. Reliability and price stability would be required for that to happen.

Sky-High Depreciation and Repair Bills Force Hertz to Sell 30k EVs

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