In a surprising turn of events, Hertz Global Holdings, one of the world’s leading car rental companies, has announced a significant shift in its vehicle fleet strategy. Despite being previously lauded by the White House for its commitment to electric vehicles (EVs), the company has decided to sell off a substantial portion of its EV fleet due to escalating costs.
A Strategic Decision
Hertz has revealed plans to sell approximately 20,000 EVs from its U.S. fleet, which constitutes about one-third of its global EV fleet. This decision was disclosed in financial filings with the Securities and Exchange Commission. The company began selling off its EVs in December 2023 and plans to continue this process throughout 2024. The proceeds from these sales will be invested in new gas-powered cars.
The company has justified this strategic shift by citing the need to balance supply against the expected demand for EVs. Hertz also pointed out the high costs associated with managing an EV fleet, including maintenance and charging infrastructure. By selling off a significant portion of its EV fleet, the company aims to eliminate a disproportionate number of lower-margin rentals and reduce damage costs.
A Change in Tune
This decision comes as a surprise, given that the White House had previously praised Hertz for its commitment to transitioning its fleet to EVs. In March 2023, the White House highlighted Hertz’s efforts, stating that the company was playing a crucial role in “accelerating the EV transition.” The administration had hoped that Hertz, along with other private and public sector entities, would contribute to President Biden’s goal of having 50% of total vehicle sales be electric by 2030.
However, a White House official has stated that Hertz’s recent actions will not impact the administration’s EV goals. On the contrary, the official suggested that the move could increase the number of used EVs on the market, which are eligible for a $4,000 tax credit under the Inflation Reduction Act.
FAQ
What is an Electric Vehicle (EV)?
An Electric Vehicle (EV) is a vehicle that uses one or more electric motors for propulsion. They can be powered by a battery that can be recharged from an external source of electricity, or by a fuel cell.
What is the Inflation Reduction Act?
The Inflation Reduction Act is a piece of legislation that includes provisions for tax credits for used EVs, among other things. Under this act, used EVs are eligible for a $4,000 tax credit.
What is the Securities and Exchange Commission (SEC)?
The Securities and Exchange Commission (SEC) is a U.S. government oversight agency responsible for regulating the securities industry, which includes stocks and bonds, mutual funds, and other investment products. Companies are required to file financial statements and other information with the SEC.
What does it mean to transition a fleet to EVs?
Transitioning a fleet to EVs means replacing gas-powered vehicles with electric vehicles. This is often done as part of a company’s sustainability efforts to reduce greenhouse gas emissions. However, it can also be a strategic decision based on factors such as cost, maintenance, and customer demand.
