Hertz recently announced its decision to increase the number of electric vehicles (EVs) it will sell, from 20,000 to 30,000 units for the year. However, the company incurred significant losses in the first quarter, including a $195 million charge for vehicle depreciation pertaining to the EVs held for sale. Overall, vehicle depreciation increased by $588 million, with $339 per unit. Notably, $119 of the $339 was linked to the EVs held for sale.
This decision came as a surprise to many industry observers, as Hertz became the first major rental company to commit to EVs on such a large scale. The company’s efforts expanded to include partnerships with Polestar and other manufacturers, accompanied by a substantial investment in advertising, featuring prominent figures like Tom Brady. However, the strategy did not yield the expected results, as Hertz suffered significant losses due to price changes made by Tesla throughout 2023. Additionally, higher-than-anticipated maintenance costs further impacted the company’s margins.
In light of these challenges, the company saw leadership changes, with CEO Scherr stepping down from his role in March. Hertz’s financial performance for the quarter was marked by a net income loss of $392 million, significantly higher than the $126 million loss reported during the same period the previous year. The company’s loss per share stood at $1.28, nearly three times the figure anticipated by analysts.