Why Hertz Is Selling Its Electric Cars So It Can Buy More Gas-Powered Cars

Who saw this one coming? Hertz, the car rental firm known for calling the cops on its customers and the company that should totally merge with Dick’s Sporting Goods because the resulting double-barreled name would be hilarious, is selling 20,000 EVs in a switch back to combustion-powered cars. This announcement comes just a few short years after Hertz announced its grand EV ambitions.

Remember back in October of 2021 when Hertz made the big announcement that it was going to buy 100,000 Teslas and how that announcement led Tesla’s stock price to climb and its value to top $1 trillion? Best laid plans, and all of that…

Hertz told Bloomberg, “The company expects to reinvest a portion of the proceeds from the sale of EVs into the purchase of internal combustion engine vehicles to meet customer demand.” Huh, customers want something familiar, who knew?

If you’ve never lived with an electric car before, it has a certain learning curve, especially if you’re far from home without charging facilities at your place of stay. The last thing many people want to do on vacation is learn to operate an unfamiliar vehicle, so it makes sense if customer demand leans heavily on combustion-powered cars.

However, that’s not the only reason Hertz is chopping in its EVs for fossil fuel-burners. It turns out that an 11 percent EV fleet mix, with 80 percent of those being Tesla vehicles, has a negative impact on the bottom line. In the words of Hertz CEO Stephen Scherr:

Expenses related to collision and damage, primarily associated with EVs, remained high in the quarter, thereby supporting the company’s decision to initiate the material reduction in the EV fleet.

Gee, higher collision repair costs on a fleet heavily reliant on Tesla. Who would’ve thought? Collision repair costs and timelines have been a sore spot for Tesla owners over the past few years. In 2019, SFGate reported that one Tesla owner had waited six months for collision repair at a Tesla-approved body shop. As owner Craig Hedges told the publication, “This accident was not my fault. So even if someone else hits you, you’re without a car for a long time. And I think that’s crazy.” Yes Craig, it is crazy. As for costs, the B2B collision repair software company Mitchell put out a fascinating report last year that compared Tesla, general EV, and non-Tesla EV average repairable damage severity against the average repairable damage severity on gasoline-powered cars. The results show a years-long cost gap.

The data shows that Teslas have historically cost more to repair than general EVs in every reported quarter save for Q3 of 2021. In addition, electric vehicles excluding Tesla models have cost more to repair that combustion-powered cars in every reported quarter. More expensive repair costs mean higher costs to rental car companies, and that’s before getting into loss of use. Every day a rental car is down is a day it isn’t making money for its owner, which hurts overall profits.

This whole situation feels like a case of “I hear that you and your band have sold your turntables and bought guitars.” It’s mildly amusing, but also proof that combustion-powered cars will be with us for years to come. Perhaps when electric cars are simply the new normal, Hertz will wholeheartedly embrace them, but until then, combustion is still king.

On the plus side, it means you can pick up a used Tesla for pretty cheap.

(Photo credits: Hertz, Mitchell, Tesla, Inc.)

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