Hey everybody, welcome back to the Elon Musk Podcast.
This is a show where we discuss the critical Crossroads, the
Shape, SpaceX, Tesla X, The Boring Company, and Neuralink.
And I'm your host Will Walden Hertz Rental Cars or Hertz
Global Holdings announced that it's planned to sell
approximately 20,000 electric vehicles from its rental fleets.
This is attributed to the escalating costs associated with
collision and damage of these vehicles, leaving the company to
favor less expensive to fix gas powered alternatives.
Now this announcement impacted the stock market with Hertz
shares dropping around 4%. Tesla, a significant part of
Hertz's EV fleet also saw its shares declined by about 3% at
that time. The financial impact on Hertz is
pretty substantial. The company anticipates a charge
of roughly $245,000,000 in the fourth quarter of last year
related to the deprecation expenses from the sale of these
EVs and Hertz move highlights the challenging situation for
EVs in the current market. Growth in EV sales has
decelerated a little bit, prompting manufacturers like GM
and Ford to reconsider their production strategies going
forward. Now Adam Jonas and analysts and
Morgan Stanley interprets Hertz decision as a cautionary sign
for the burgeoning EV sector. Right now, he suggests a need to
recalibrate market expectations for electric vehicles and also
for rental fleets. Now Jonas points out that
despite the appealing driving experience and fuel efficiency
of EVs, ownership entails additional, often overlooked
costs. Now, Hertz previous commitments
to electric vehicles included an order of 100,000 Tesla cars by
the end of 2022 and a subsequent agreement to purchase up to
65,000 vehicles from Polestar over five years.
And Hertz cited elevated expensive linked to EV
collisions and damages as a primary reason for this
decision, as mentioned in the regulatory filing.
Meanwhile, German car rental company 6th SIXT has also moved
away from Tesla. They stopped purchasing Tesla
vehicles since 2022 and are now selling off their Tesla fleet as
part of the regular vehicle rotation and despite divesting
from Tesla 6th remains committed to electrifying its fleet,
aiming to convert 70 to 90% of its European rental fleet to
electric by 2030. Now Hertz, while reducing its EV
inventory plans to continue enhancing the profitability in
its remaining electric fleet. Now market trends indicate a
decline in used EV prices through most of 2023.
This trend is expected to persist with used E VS projected
to deprecate more than overall used vehicle market in 2024
according to Cox Automotive. Fun fact, I used to work for Cox
Automotive for about two years and I love the experience there.
Great company to work for great people.
Carl Brewer, the IC Cars spokesman, notes that while
20,000 vehicles represent a small fraction of the used
vehicle market, Hertz's sales will contribute to the ongoing
trend of depreciating used EV values, resulting in significant
losses for the company. Hertz is offering some of his
Model 3 vehicles at nearly half their original purchase price
with listings as low as $20,000. So get on it.
If you're looking for an EV, More than likely you can get a
Tesla for much cheaper than retail.
Now this move comes as the company aimed for 25% of its
fleet to be electrified by the end of 2024 / 700 E VS,
including models from BMW, Chevy, and Tesla are listed for
sale on Hertz's used auto website.
These sales provide an opportunity for consumers to
acquire affordable electric vehicles like model threes and
recurrent auto Suggest that Hertz test the model threes
might qualify for a used EV tax rebate too, so you can save
potentially more money now. This situation presents an
attractive option for you if you're seeking affordable EVs
despite concerns over the reliability and high mileage
that other rental cars would have too.
I know people who have bought edit this out personally.
I know people that have bought their vehicles from rental
agencies and they turned out to be OK.
Nothing really wrong with them. It's kind of like buying a car
from a regular person, but just a bunch of different people
doing different sort of driving than say what I was told when I
bought my Subaru, my last Subaru, that it was used by a
grandma going from her house to the grocery store.
So which I don't think that's actually true, but you know
what? Burlington Subaru you got me.
But that was a great car, 200,000 miles at that one.
So they got me on that one. I'm not sure the models or the
makes of the model threes or the actual serial numbers, but I'm
sure they're in pretty good condition.
So to go check them out, see if they're good for you.
Now, comparisons with other marketplaces, though, like
CarMax and Autotrader, show that Hertz's offerings are
competitively priced. Consumer Reports rates the Model
3's reliability as average, supporting the notion that
Hertz's Tesla vehicles are pretty good values.
Now, Hertz's decision to sell a substantial portion of its EV
fleet shows a big shift in its business strategy, reflecting
the current challenges and economic realities of the EV
market. This move offers customers an
opportunity to purchase EVs at lower prices with considerations
regarding their condition and reliability.
It might be right for you, so go check it out.
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