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It’s a precautionary tale for how to assess new markets — and how not to introduce a new product
Hertz made a plash in 2021 when it announced that it would corrupt 100,000 Tesla Model 3 sedans in a niggling over a year . Six months later , the rental car caller said it would buy 65,000 Polestars over five years . It appeared that the EV transition was about to sweep the rental car market .
On Thursday , the sweep spit out .
Hertz said in anSEC filingthat it would be selling 20,000 of its EVs and replacing them with fogey fuel – powered vehicle . Another sign of EV momentum slowing ? Perhaps . But it ’s more probable a precautional tale for how businesses should tax new markets — and how not to bring in a Modern merchandise to your client .
After Hertz start buying electron volt , it direct most of them to Uber drivers . Uber was pushing driver toward EVs in a number of markets , cities like New York were tempt them to make the switch , and they had attractive operating cost comparative to gasoline - powered cars . Uber number one wood also rented the cars for long periods of time , Hertz said , meaning that fewer employees were require to support a given number of vehicle . Plus , maintenance costs were lower , and Hertz was able-bodied to rent them at mellow price .
“ electrical vehicles give the door to our growing presence in drive - share , where electrification is a fast approach requirement not just an choice , in a channel where we are uniquely pose , ” Hertz CEO Stephen Scherr tell in the company’sQ3 earnings call .
But while maintenance costs may have been lowly , restore damage from collision ended up being higher than expected . Given that Teslas cost more to quicken , that should n’t come as a surprisal . They ’re comparatively new vehicle , and body shops do n’t have as much experience with them . It ’s a trouble that ’s not unparalleled to Teslas : Fixing a Volkswagen costs more than fixate a Chevy , for example . Why Hertz thought its cars would be different is anyone ’s conjecture .
High - damage repair cost were compounded by the fact that many of the drive - share drivers Hertz rented to were either inexperienced or bad drivers or both . Hertz had “ higher incidents of impairment among EV drive - share drivers , ” Scherr said , forcing the company to “ re - subvention the drive - portion number one wood base . ”
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In other words , Hertz had to qualify which drive - share driver could rent EVs because the spoilt 1 were wrecking them too often , racking up expensive mend bills .
As a answer , Scherr added , “ this left leisure over - fleeted with EVs . ” Translation : The EVs that could n’t be rented to ride - share drivers were pushed onto vacationer . The company ’s initial mix , point in the first place at drive - share , where there was demand , was shifted toward leisure time driver , who had show some but not most as much interest . The problems occurred when Hertz made the change without considerably changing its EV renting experience .
The good and the bad
I had two encounters with Hertz EVs in the past year and a half . One was pretty salutary , the other not , and it was the 2nd one that suggested the rental car company was n’t up to the task .
My first Hertz EV experience was with a Tesla , the only cable car available at O’Hare when I booked . That experiencewent well . The fellowship guide me to the parry , where an employee gave me a prompt tutorial on drive and saddle a Model 3 . I was offer the chance to deposit $ 35 in case I was n’t able to consign the automobile to 70 % upon takings , but thanks to the Level 1 ( 120v ) courser in the frunk and Tesla ’s far-flung Supercharger web , I get my money back .
My second experience was await so dire that I aborted before even loading my bags . I had n’t select an EV , but or else was pass on a choice of vehicles from a special row . One was a Polestar 2 , a car I had been eager to drive . But after see nearby tight - charging options lacking and the motorcar ’s horizontal surface 1 charger missing , I pay up . I ’ve owned one EV or another since 2015 ; I know that without any agency to handily charge , the car would be more hassle than it was worth .
Now ideate how that situation would wager out for someone who has never drive an EV .
really , we do n’t have to imagine . Plenty of hoi polloi have posted online about their experience , and while some are glowing , many reflect the frustration of client squeeze to use a product that the company has n’t to the full thought through .
One personposted on Redditthat they rent from a Hertz locating in Manhattan that only had EVs . They had never driven an electron volt and did n’t agree to lease one . But it being Thanksgiving weekend , they had seat to be , so took a Kia EV6 anyway . They attempted to charge at a Tesla Supercharger , at which percentage point they find the car was n’t compatible with the plug . Then they had a very distinctive confrontation at their hotel where the Level 2 charger was n’t working . last , they had to purge Manhattan to retrieve a place to institutionalize before render the car .
Even experienced EV owner have found Hertz ’s EV rentals frustrating . “ Rental car companies postulate to include the L1 charger . Rental motorcar companionship demand to have cars set out at 80 % , ” Reddit userkadoro saidof their Hertz experience . The first car they count only had 40 % commission , the 2d one had 49 % , and the third one , which they pick , had 51 % . conceive of rent a gas pedal car with half a tank . People would be livid ! Also , because kadoro did n’t have entree to an app , they said tripper planning was much harder than with their personal Nissan Leaf or Chevy Bolt .
Simple fixes
All of these are problems that could be ready with some serious-minded provision on Hertz ’s part . Here ’s a brief ( though not comprehensive ) listing of what rental railroad car company postulate to do if they are to make EVs work for their fleets :
That ’s a reasonably basic list , and something that ’s well within Hertz ’s ( and other rental company ’ ) powers to fix .
Indeed , Hertz basically say as much . In itsSEC filing , it all but admitted that it fluff the rollout . The company said that it is trying to amend EV rental profitability by amplify EV charging infrastructure , securing more affordable fixture parts and labor , and “ continued implementation of policies and educational creature to help enhance the EV experience for customer . ” That ’s corporate - speak for “ we were n’t ready . ”
The timing of Hertz ’s EV liquidation is perhaps surprising , but then again , most rental railway car are deal after a yoke class of Robert William Service . It was going to materialise eventually . The only grounds this is tidings is that Hertz had to lodge an 8 - K because of the $ 245 million flush it has to reserve . And that charge happened largely because its Teslas depreciated quicker than expect after the price cutting . The cause it ’s selling them now is because it shift the car to leisure customer before it was adequately inclined to corroborate them .
The short of it is that Hertz did a tough job underwriting its ride - portion customers , and it bought its EVs at the eyeshade of the market . It ’s true that many customer are n’t ready for EVs , but it ’s also lawful that Hertz was n’t ready to rent to them , either .
