Rental car operator Hertz (HTZ) said it lost another $200 million due to its bet on electric vehicles.
In his first quarter earnings reportHertz said it had “augmented” its previous plans to reduce its electric vehicle fleet by an additional 10,000 electric vehicles, leading the company to incur a $195 million charge for vehicle depreciation to depreciate the value of electric vehicles intended for sale.
The company previously announced that it would sell 20,000 electric vehicles from its fleet, meaning it will now have 30,000 electric vehicles from its fleet until the end of 2024. Add today’s charges to the $245 million writedown made in the fourth quarter, and the company has now lost $440 million on its EV bet.
Hertz’s electric vehicle fleet, which once numbered 60,000 electric vehicles, will be cut in half to 30,000 electric vehicles. A third of Hertz’s electric vehicle fleet came from Tesla (TSLA), with the rest coming from Polestar (PSNY), Volvo (VLVLY), and Chevrolet (GM).
For the quarter, Hertz reported an adjusted loss of $1.28 per share, more than the $0.44 loss analysts expected. Hertz reported an adjusted net income loss of $392 million, more than double the expected loss of $147 million.
Hertz stock was down 20% as of midday.
Hertz’s depreciation per unit (DPU) jumped to $592 in the first quarter, a jump from $498 in the previous quarter and more than double the $253 reported in the first quarter of last year. Hertz attributed the deterioration in DPU to losses related to sales of gasoline vehicles as well as losses related to the market value of electric vehicles in its fleet and the disposal of other electric vehicles.
Hertz’s bet on electric vehicles hasn’t just come with financial costs. Last month, then-Hertz CEO Stephen Scherr, who led the plan to go all-in on electric vehicles, was replaced by Gil Westformer COO of GM’s autonomous Cruise unit and, before that, COO of Delta Air Lines.
“Fleet and direct operating costs weighed on performance this quarter,” Hertz CEO Gil West said in a statement. “We are tackling both issues: achieving an adequate supply of vehicles at an acceptable investment cost while increasing productivity and reducing operating costs.”
Hertz was an early adopter of electric vehicles, announcing in 2021 that it would purchase 100,000 Teslas within a year. marketing campaign featuring former NFL quarterback Tom Brady. At the time, Hertz, which was only a few months away from bankruptcy, saw its stock jump 10%, with Tesla shares jumping in sympathy. Tesla surpassed $1 trillion market capitalization for the first time.
Hertz also reached an agreement with Polestar in February 2022 to purchase 65,000 of its electric vehicles, although Hertz informed Polestar in February 2023 that this would be the case. suspend future purchases of its electric vehicles.
As Hertz reduces its offering of electric vehicles in its fleet, sales of electric vehicles continue to grow at the retail level, although at a slower pace. GM CFO Paul Jacobson said this this week following the…
