It appeared like a good suggestion on the time. Now we all know higher.
Hertz, reeling from a chapter and the pandemic, introduced plans to purchase 100,000 Teslas in late 2021. The splashy transfer actually helped Elon Musk’s electric-vehicle maker, which noticed its market cap surge previous $1 trillion for the primary time.
Hertz loved a bump in its market worth as properly, and the car-rental large employed NFL star Tom Brady to indicate off its new fleet of Teslas.
“How will we democratize entry to electrical autos? That’s an important a part of our technique,” interim CEO Mark Fields mentioned on the time. “Tesla is the one producer that may produce EVs at scale.”
However Hertz paid near record costs for the Teslas, somewhat than demanding a big low cost as car-rental giants typically do. That call would come again to chunk it.
Final yr, Musk’s EV maker minimize costs throughout its lineup to spice up gross sales. That not solely angered particular person prospects who’d not too long ago purchased a Tesla at a better value, however it additionally crushed the resale worth of Hertz’s used EVs.
‘Elevated prices’ of EVs
This January, the rental large revealed that it was promoting off 20,000 electrical autos, noting the pricey depreciation, weak demand, and dear repairs. It took a $245 million hit and suffered its steepest quarterly loss for the reason that pandemic.
“The elevated prices related to EVs continued,” Hertz CEO Stephen Scherr mentioned on the time. “Efforts to wrestle it down proved to be tougher.”
This week, Hertz introduced that Scherr would get replaced by Gil West, the previous COO of Common Motors’ Cruise robotaxi unit. Whereas Scherr took over after the Tesla deal, beneath his management Hertz continued its concentrate on EVs, inserting huge orders for them with GM and Polestar.
The ill-fated EV push adopted a tough stretch for Hertz that culminated in billionaire activist investor Carl Icahn unloading his substantial stake within the car-rental firm in 2020 days after its chapter. In 2014, Icahn had begun buying his stake in Hertz, which was struggling. He known as Hertz “a fantastic model” that he hoped would “return to its former glory,” and three of his allies quickly had board seats, whereas the hunt for a brand new CEO started.
After promoting promoting his stake, Icahn mentioned, “Yesterday I offered my fairness place at a big loss, however this doesn’t imply that I don’t proceed to place confidence in the way forward for Hertz.”
The next yr, the corporate introduced the choice to purchase Teslas. Now it’s about to welcome one more new CEO, once more tasked with turning issues round.
