Hertz Global Holdings Inc. said it finished selling off 30,000 electric vehicles, many of which were Tesla Inc. models, as the rental giant moves on from an ill-advised bet on plug-in cars that customers didn’t want and were expensive to maintain.
The headlong push into EVs contributed to a loss of $2.9 billion in 2024, Hertz said Thursday in a statement that detailed fourth-quarter earnings.
Hertz shares fell 8% as of 10:46 a.m. in New York, paring an earlier 14% decline.
Forgive me if I’ve told this story before, but one time I was renting from Hertz and they offered me a free upgrade to a Tesla. The only catch was I had to return it fully charged. It was a one day business trip, how was I going to figure that out?
So I said screw it, and rented a gasser.
EVs were a reasonable experiment for Hertz. Many potential buyers might try an EV to see how they like it. The industry has done that before with sports cars, vans, station wagons, etc.
The EV venture didn’t work out at least not on the scale envisioned. And the EV price wars reduced resale value making it worse financially.
The idea was good. But the carrying out of the plan by Hertz was professional incompetence on steroids.
As an experiment it was reasonable. The problem is Hertz went big. They bought 100,000 Teslas, nearly a quarter of their entire fleet. It seems more prudent to have rolled it out in a limited number of test markets first.
When we discussed this at the time, it was believed Hertz paid list price for the vehicles. I don’t know if that’s true, but it is likely Hertz did not get much of a discount (unlike from other manufacturers) because Tesla was selling all it could make at the time.
I like the thought, but the execution was poor.
As you say, it would have been a reasonable experiment had they done it as an experiment. Buy a few hundred and place them at some locations. Then track how well they do at those locations. Expand the experiment in successful areas and add similar areas that might be successful. Instead they bought tens of thousands in one shot as a “hail mary” to get some good press at the time. It was a very bad bet and cost the then CEO their job.
I would amend that to say “as a small experiment it was reasonable.” It was nearly a bet-the-farm experiment which obviously turned out horribly.
I’m sure the CEO was looking for some great new program he could take credit for (as one wag told me “every new boss likes to pee on the bush to mark his territory”), but there were many downsides to this, as time has shown: customers were unfamiliar with EVs. Charging was difficult. Returning a car fully charged was nearly impossible. The primary advantages of an EV are 1) the cost of gas, 2) quiet, 3) fun. I’d submit that most EV renters are unconcerned with the cost of gas because the business is paying, don’t care about the noise, and OK, maybe fun to drive for the first 10 minutes.
As time has shown it was a bet which went disastrously bad, and quickly. That’s why you do pilot tests, to find stuff out. Steve Jobs wanted to open Apple Stores across the country, but the BoD said “Do four as a test.” Which they did, and yes it was a raging success - but what if it hadn’t been?
You better be pretty darn sure of yourself when you make such a substantial change to a business (or the business better be on the precipice of failure) because if it goes bad, you’re the goat, and not the GOAT.
But how does an international rental car company market that. EVs available an only select locations. Clients who want to drop them off at their destination city. Its a mess. Hard to even advertise. You need some EVs in every city with a major airport at least. And wired for recharging.
Yes, that’s how they would do it.
This is what you do after the experimental phase.
Most people rent and drop off at the same location. I should mention I had a similar experience with Avis/Budget. They offered an upgrade to a Tesla (can’t remember if the upgrade was free or not), but told me I didn’t have to return it charged, so I took them up on it.
Ok, but how often do travelers read local newspapers. You have to advertise program nationally to educate renters. Along the lines of “check availability in these cities.”. Or email availability when you make reservations.
Can be done but cumbersome. Doubtful results.
Hertz is not going to be the only company that suffered bad bet. I fully expect few others will emerge on a bet on autonomous vehicle, new competitors for $UBER, $LYFT, etc. Most I expect will be road kill. These are for the VC firms, but unfortunately they will come public, and investors will get burned.
???
95+% of rental car reservations are done online (or in their app). First you enter some info, especially pickup location, then they show which cars, or which car groups, you can choose from, with prices. Right there, if they want, they can show the “specials”, maybe including an option for an EV. Not very complicated.
Horse feathers. There are often ads which specify “available at participating locations”, including fast food giants like McDonald’s and Chick-FilA. More than that, you can buy regional ads, or local ads in specific cities; the cable companies will sell you ads for specific geographies and regions, and you can advertise on Facebook by the block, street, neighborhood, area, city, state, or any other way you want to split the demographic, including by income, race, political preference, or whether they like cherry pie.
Doing test marketing is easy, and major corporations do it all the time. Some cities vie to become “test markets” because of their “average” demographics or other traits, bringing in lots of advertising dollars for tests without the expense of a national rollout for a new product. Happens all the time. Happening right now, I’m sure.’’
Hertz screwed up. Big time, that’s why the guy is gone.
Not with computers.
Besides if a car is available it is available. If not then it is not available. if demand is there buy more of them.
