It appeared like a good suggestion on the time. Now we all know higher.
Hertz, reeling from a chapter and the pandemic, introduced plans to purchase 100,000 Teslas in late 2021. The splashy move definitely helped Elon Musk’s electric-vehicle maker, which noticed its market cap surge previous $1 trillion for the primary time.
Hertz loved a bump in its market worth as effectively, and the car-rental big employed NFL star Tom Brady to point out off its new fleet of Teslas.
“How do we democratize access to electric vehicles? That’s a very important part of our strategy,” interim CEO Mark Fields stated on the time. “Tesla is the only manufacturer that can produce EVs at scale.”
However Hertz paid close to list prices for the Teslas, fairly than demanding a big low cost as car-rental giants usually do. That call would come again to chunk it.
Final 12 months, Musk’s EV maker minimize costs throughout its lineup to spice up gross sales. That not solely angered particular person prospects who’d not too long ago purchased a Tesla at a better worth, but it surely additionally crushed the resale worth of Hertz’s used EVs.
‘Elevated costs’ of EVs
This January, the rental big revealed that it was promoting off 20,000 electrical autos, noting the pricey depreciation, weak demand, and expensive repairs. It took a $245 million hit and suffered its steepest quarterly loss because the pandemic.
“The elevated costs associated with EVs persisted,” Hertz CEO Stephen Scherr stated on the time. “Efforts to wrestle it down proved to be more challenging.”
This week, Hertz introduced that Scherr would be replaced by Gil West, the previous COO of Basic Motors’ Cruise robotaxi unit. Whereas Scherr took over after the Tesla deal, below his management Hertz continued its give attention to EVs, putting huge orders for them with GM and Polestar.
The ill-fated EV push adopted a tough stretch for Hertz that culminated in billionaire activist investor Carl Icahn unloading his substantial stake within the car-rental firm in 2020 days after its chapter. In 2014, Icahn had begun buying his stake in Hertz, which was struggling. He called Hertz “a great brand” that he hoped would “return to its former glory,” and three of his allies quickly had board seats, whereas the hunt for a brand new CEO started.
After promoting promoting his stake, Icahn stated, “Yesterday I sold my equity position at a significant loss, but this does not mean that I don’t continue to have faith in the future of Hertz.”
The next 12 months, the corporate introduced the choice to purchase Teslas. Now it’s about to welcome yet one more new CEO, once more tasked with turning issues round.
