Rental car giant Hertz hit a huge speed bump with its profitability, and its blaming the ill-advised choice to go green with Elon Musk’s electric cars. The company is blaming its recent quarterly profits miss on Tesla’s price cuts and unexpectedly high EV repair costs, which both caused big problems due to Hertz’s decision to build a large fleet of Tesla vehicles.
Bloomberg reports that Hertz, the popular car rental company, has encountered significant challenges that have caused it to miss its quarterly profit estimates. The company has been caught in the crosswinds of Tesla’s aggressive price-cutting strategies and the soaring repair costs associated with electric vehicles (EVs). Tesla has lowered its prices to boost sales, which has decreased the resale value of Hertz’s EV fleet by about one-third, according to Hertz CEO Stephen Scherr.
Tesla cars recharge at a Tesla Supercharger station on February 15, 2023 in San Francisco, California. (Photo by Justin Sullivan/Getty Images)
The repair expenses for EVs have also thrown a wrench in the gears of Hertz’s financial machinery. The costs have been almost double that of repairing traditional gasoline cars. Scherr revealed that these unexpected costs have been a significant factor affecting the company’s profits.
In response to these challenges, Hertz has decided to tap the brakes on the acquisition of new EVs. This strategic slowdown aims to allow the company to better manage and navigate through the prevailing cost-related challenges. Despite the current hurdles, Hertz remains steadfast in its commitment to electrifying its fleet. The company has ambitious plans to purchase a substantial number of EVs from automotive giants such as Tesla and General Motors. “Hertz remains committed to buying 100,000 cars from Tesla and 175,000 EVs from General Motors Co.,” affirmed Scherr.
Scherr stated: “We have an opportunity to buy these cars now at roughly a third less than where we bought the initial component of our Teslas. We’re ultimately better buyers on a falling price where the margin composition on those cars will be better. They will be even better to the extent that we solve the issues around damage and cost.”
Read more at Bloomberg here.
Lucas Nolan is a reporter for Breitbart News covering issues of free speech and online censorship.