Car rental company Hertz is increasingly relying on electric cars in its fleet. But these ruin the balance sheet due to high repair and accident costs as well as large losses in value. There clearly comes a price to pay for being a member of the climate cult. The expansion of the electric car fleet will now slow down significantly.
Car rental giant Hertz actually wanted to have 100,000 electric vehicles in its global fleet by the end of 2022. However, according to a report, by the third quarter of 2023, there were only about 50,000 and hence about eleven percent of the total vehicle fleet. The majority of these electric cars (about eighty percent) are Teslas. And with electrification efforts facing further setbacks, plans in this regard are likely to be further delayed. Because electric vehicles are proving to be a cost driver that is wreaking havoc on the balance sheet.
During the company’s third quarter earnings call, Hertz CEO Stephen Sher announced that there was strong demand and high vehicle utilization. However, adjusted EBITDA margin of thirteen percent remained well below investors’ expectations. The company attributed the worse-than-expected results to electric vehicles in the fleet. This will result in significantly higher costs to repair the accident and damage. Their price will be almost double that of petrol engines. There were also greater depreciation as the residual value of Hertz’s Tesla fleet also declined due to Tesla’s price cuts.
The company also said that without electric vehicles, the overall result would have been several hundred basis points (ie several percentage points) higher. But even though top management is optimistic about the future of electric vehicles in the company’s portfolio, there are still dark clouds looming on the horizon. As Report 24 has already reported, objections from insurance companies are increasing when it comes to electromobility because repair costs are too high. Here too, the burden on car rental companies like Hertz will increase significantly.
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