Hertz, the rental car giant, has begun offering electric vehicle (EV) renters the opportunity to purchase their rental cars at heavily discounted prices, as part of an effort to offload inventory from its struggling EV fleet. According to The Verge, renters have been receiving offers to buy cars like Teslas, Chevrolets, and Polestars for prices lower than those seen on Hertz’s own sales website. For example, one 2023 Tesla Model 3 renter was offered the car for just $17,913, even though the vehicle had already accumulated around 30,000 miles. Other offers include a 2023 Chevy Bolt for $18,442 and a Polestar 2 for $28,500.
These used cars come with a 12-month, 12,000-mile powertrain warranty and a seven-day buy-back option, providing renters with some reassurance. However, the move comes amid ongoing challenges for Hertz in its efforts to build a robust EV fleet. While the rental company initially planned to electrify its entire fleet and positioned itself as a key player in the EV revolution, the company has been scaling back its ambitions due to issues like lower resale values and high repair costs, particularly for Teslas.
Hertz’s ambitious EV expansion began with a landmark deal to purchase nearly 200,000 EVs from Tesla and Polestar, a move that boosted Tesla’s valuation to over $1 trillion. But this plan has faced headwinds. Hertz CEO Stephen Scherr noted that the plummeting resale value of EVs and the high cost of repairs, which are double the cost of fixing traditional gas-powered vehicles, have hurt the company’s bottom line. The company also struggled with the wear and tear on its EVs from ridehail drivers, as half of its Tesla fleet was allocated to Uber drivers. These drivers, who tend to put more miles on their vehicles, have caused more damage than Hertz anticipated.
In a recent earnings report, Hertz acknowledged that if not for the challenges related to its EV fleet, the company would have met Wall Street expectations. In the face of these difficulties, price cuts, particularly from Tesla, have further impacted the company’s financials, with EV values dropping significantly since 2023.
Despite these struggles, Hertz remains committed to its long-term goal of electrifying its fleet. The company still plans to acquire 65,000 Polestar vehicles, and Scherr emphasized that the company believes in the value of being a first-mover in the electric vehicle space. “We remain committed to our long-term strategy to electrify the fleet,” he said, even as the company continues to navigate the challenges of EV ownership and maintenance.
For now, the offers to renters are a way for Hertz to mitigate some of the financial pressure from its EV investments, while also building awareness of its car sales operations. But whether these efforts will be enough to turn the tide remains to be seen as Hertz contends with the growing pains of its ambitious electrification strategy.
