Hertz CEO out following electric car ‘horror show’

The rental car industry Hertz is still experiencing a lot of trouble and strife. In January, the firm made the announcement that it was selling 20,000 of the electric vehicles in its fleet, which is around a third of the total number of EVs it possessed. Now, the company is replacing the CEO who was instrumental in the construction of that fleet, making this the fifth CEO the company has had in only four years. At the end of this month, the company has announced that Stephen Scherr, who has been with the company for two years and had previously worked for Goldman Sachs for nearly thirty years, will be resigning from his position. In his place, Gil West, who formerly served as the chief operating officer of both Delta Air Lines and the Cruise unit of General Motors, will take over.

An increase in the value of the electric vehicles that Hertz was selling resulted in a decrease in the company’s earnings of $245 million during the most recent quarter. There was less demand than some of the traditional automakers had anticipated when they moved to provide electric vehicles, despite the fact that the number of electric vehicles purchased by customers in the United States increased by forty percent in the previous year, topping one million for the first time. Tesla, which is the market leader in electric vehicle sales in the United States, initiated a pricing war for electric vehicles a little over a year ago, which has resulted in a decrease in the value of both new and used electric vehicles, including those that are part of Hertz’s fleet. And the decrease in prices had a negative impact on Hertz’s bottom line because it decreased the amount of money it anticipated anticipate receiving from the resale of the automobiles.

On the other hand, the issue for Hertz was not necessarily that the automobiles were electric; rather, the issue was that customers simply do not want to drive electric vehicles. According to specialists in the industry, the issue was over the manner in which Hertz managed the fleet in general. “The execution and marketing of electric vehicles [by Hertz] was a horror show across the board,” said Daniel Ives, an analyst with Wedbush Securities who monitors the electric vehicle market. It’s a black eye from which they might never be able to recover.

Even individuals who might be interested in purchasing an electric vehicle would not necessarily want to rent one while they are on the road because they do not necessarily have the ability to plug them in to charge them in the same way that they would be able to do so at a private residence. This was one of the problems that Hertz faced. According to Ives, it is possible that a customer renting a car will not have access to a charging station or sufficient time to charge an electric vehicle.

It is possible that Hertz has discouraged customers from wanting to rent an electric car by adhering to charging standards in the same manner that it has enforced requirements around refueling. The fact that Hertz did not construct any charging infrastructure at its rental locations may have been detrimental to the company’s own business. Ives stated that the individuals in question do not wish to go out of their way for twenty minutes at five in the morning in order to locate a charging station.

Announcing that it would purchase 100,000 electric vehicles from Tesla in October of 2021, just prior to the company’s initial public offering following its exit from bankruptcy, Hertz had made the announcement. The expectation was that the promise of being at the forefront of the ever-increasing demand for electric vehicles would entice investors and boost the stock price of the company.

Polestar is an electric vehicle (EV) company that is co-owned by Volvo and its Chinese parent company Geely. It subsequently announced plans to purchase up to 175,000 electric vehicles (EVs) from General Motors and 65,000 EVs from Polestar. However, Hertz’s entire electric vehicle fleet had barely reached 60,000 before the company made the decision to reduce its fleet. Nevertheless, that was sufficient to constitute eleven percent of its fleet.

Even if the value of the automobiles that Hertz purchased did not decrease, the company still had a difficult time repairing collisions and damage to an electric vehicle that had a speed that was approximately twice as fast as a comparable vehicle powered by a combustion engine, Scherr explained to investors during a call in 2023.

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