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    Industry Upset: Hertz Selling One-Third of EV Fleet as Demand Falls Across US

    Jan. 11, 2024
    The divestment will take place over the course of 2024 and result in about $245 million in net depreciation expense, according to the SEC filing
    Hertz
    65a04ab9a27aaa001ecd2101 Hertz 2

    The pace of transportation electrification took a downshift Thursday as rental car giant Hertz reported falling demand and higher upkeep costs, leading it to sell one-third of its electric vehicle fleet in the U.S.

    Corporate owner Hertz Global Holdings filed an update with the U.S. Securities and Exchange Commission, revealing it had made the “strategic decision” to sell approximately 20,000 EVs from its U.S. fleet.

    The divestment will take place over the course of 2024 and result in about $245 million in net depreciation expense, according to the SEC filing.

    Hertz expects to re-invest proceeds from the sales, but not into future EV models.
    “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,” it reported to the SEC.

    Despite the environmental move toward lower or no emissions vehicles, including government incentives toward EVs and charging infrastructure, Hertz said it is doing the sale for financial purposes. Incremental Cash flow will total between $250 million and $300 million over the next two years as a result of the transactions.

    Two issues combining to justify the move, Hertz told the SEC, were lesser demand and rising operating costs per transaction day, primarily related to collision and damage expenses of the EV fleet.

    “While direct operating expenses per transaction day, excluding collision and damage, will be flat for the quarter and down for the year, 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,” the filing reads.

    In September 2022, Hertz announced a memorandum of understanding with bp’s electrification charging group, bp pulse, to manage quick recharging of EVs in the rental fleet across some 500 locations. At the same time, Hertz reported an EV fleet that included Teslas, Polestar and GM models.

    About the Author

    Rod Walton, EnergyTech Managing Editor | Senior Editor

    For EnergyTech editorial inquiries, please contact Managing Editor Rod Walton at [email protected].

    Rod Walton has spent 15 years covering the energy industry as a newspaper and trade journalist. He formerly was energy writer and business editor at the Tulsa World. Later, he spent six years covering the electricity power sector for Pennwell and Clarion Events. He joined Endeavor and EnergyTech in November 2021.

    Walton earned his Bachelors degree in journalism from the University of Oklahoma. His career stops include the Moore American, Bartlesville Examiner-Enterprise, Wagoner Tribune and Tulsa World. 

    EnergyTech is focused on the mission critical and large-scale energy users and their sustainability and resiliency goals. These include the commercial and industrial sectors, as well as the military, universities, data centers and microgrids. The C&I sectors together account for close to 30 percent of greenhouse gas emissions in the U.S.

    He was named Managing Editor for Microgrid Knowledge and EnergyTech starting July 1, 2023

    Many large-scale energy users such as Fortune 500 companies, and mission-critical users such as military bases, universities, healthcare facilities, public safety and data centers, shifting their energy priorities to reach net-zero carbon goals within the coming decades. These include plans for renewable energy power purchase agreements, but also on-site resiliency projects such as microgrids, combined heat and power, rooftop solar, energy storage, digitalization and building efficiency upgrades.

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