Impact of Tesla Price Cuts and Repair Expenses Forces Hertz to Reduce Pace of EV Expansion

Impact of Tesla Price Cuts and Repair Expenses Forces Hertz to Reduce Pace of EV Expansion

Last week, General Motors and Ford⁤ announced ⁣that they are delaying their spending on electric vehicles (EVs) due to slowing demand and the EV price ⁣war initiated⁤ by Tesla. ‌It seems that Detroit’s biggest automakers ⁢are not the ‌only ones taking a cautious ⁤approach to ⁤EVs. Hertz, the rental ​car giant,⁤ also revealed on its Q3 earnings call that ⁢it is slowing down the pace at which it adds ‍EVs to its ⁣fleet.

Two years ago, ‌Hertz made ⁢a pledge to order 100,000 Tesla EVs by the end of⁤ 2022. However,‍ the company currently only⁤ has‍ around 35,000 Tesla‌ vehicles in its fleet, falling short of its ‍original‍ target. Hertz CEO Stephen Scherr⁣ stated that the company does not plan on reaching that target anytime soon, as he mentioned, “our in-fleeting ⁢of​ EVs‌ will be slower than our prior expectations.”

The lower-than-expected margins‌ posted by Hertz for the previous quarter were attributed to ⁣EV repairs ​and Tesla’s ​price cuts, which affected the resale value of Hertz’s EVs by about ‍one-third, according to Scherr.

Despite ⁤the setbacks, Hertz remains committed to purchasing⁣ 100,000 cars from Tesla and ​175,000 EVs from GM. ⁣However,‌ the ‌company is no ⁢longer on track⁤ to have EVs account for​ a quarter of its fleet by the end of 2024 as ⁢previously anticipated.

Hertz is working with Tesla to assess the performance of their cars ⁣in order to⁣ minimize the risk of damage ⁢incidents. As Hertz acquires more EVs‌ from GM and other automakers, it expects these vehicles to have lower damage rates and reduced costs for parts and labor, as explained by Scherr.

Currently, around 80 percent of the ​EVs‍ in Hertz’s fleet are Teslas, making up⁤ about 11 percent ‌of its entire fleet.⁢ With ⁣approximately 50,000 EVs in its fleet, it can be estimated⁣ that around 35,000 of them are Teslas.
Impact of Tesla Price ‍Cuts and Repair⁤ Expenses Forces Hertz to Reduce Pace of EV Expansion


Tesla’s recent price cuts ‍and the increasing repair expenses associated with their electric vehicles (EVs) have had ⁣a ‌notable impact on Hertz’s plans for expanding their EV fleet.​ Hertz, a prominent car rental company, had previously announced intentions to rapidly expand their EV offerings, but the⁣ financial‍ implications of Tesla’s decisions have led them to reassess their strategy. This‍ article explores the reasons behind this shift and the potential ⁣consequences for both Tesla and Hertz.

Tesla ‍Price Cuts

Tesla’s decision to lower the prices of their EVs may seem like a ⁢positive development for car buyers. However, for ⁢companies like Hertz, who purchase a large number of vehicles at once, it poses significant challenges. Lower prices directly affect ‌the residual value of the vehicles, impacting the overall profitability of the rental business. As Hertz aims to maintain a viable rental model, ‌the reduced resale value of EVs due ⁣to Tesla’s price cuts has forced them to rethink their expansion plans.

Repair Expenses

Another factor that has ‍influenced Hertz’s decision to slow down their EV expansion ⁤is the increasing repair expenses associated with Tesla vehicles. While Tesla had initially promised lower repair costs for their EVs compared⁢ to traditional combustion engine vehicles, the reality has been quite different. Hertz has encountered high repair bills, extended repair times,⁣ and a lack of available parts, resulting in prolonged periods of vehicle downtime⁣ and substantial financial strain.

Financial Implications for Hertz

The combination of Tesla’s price cuts and rising repair ‌expenses has ⁤placed Hertz ‍in a ​difficult​ financial position. Being a rental company, Hertz heavily relies on the residual value‍ of‌ their fleet to offset​ costs and ensure profitability.⁣ With reduced resale values and⁤ expensive repairs, the ⁢financial burden on Hertz has increased significantly. As a⁣ result, Hertz has announced a reduction in the pace of their EV expansion plans, with‍ a slower adoption of Tesla vehicles within their ⁤fleet.

Impact on Tesla

Hertz’s decision to scale back their EV expansion plans could have repercussions for Tesla as well. Tesla has prided itself on its partnership with Hertz as a ​cornerstone for the proliferation of EVs in the rental sector. ​Hertz is one of the largest ⁣rental car companies globally, and their‌ commitment to EVs⁢ was seen as a significant endorsement for‌ Tesla’s electric fleet. However, the‌ recent setbacks may have a negative ⁤impact on Tesla’s reputation and its ability to secure partnerships with other car rental companies.


The⁣ combination of Tesla’s price cuts ⁢and escalating repair⁣ expenses has forced Hertz to reevaluate and slow down its plans for expanding ⁢its EV fleet. The ⁢reduced residual value ‍of ‍Tesla vehicles and increased financial strain from repair costs have played a crucial role in this decision. Both Tesla and Hertz are now faced with ⁢significant challenges as ⁤they navigate the evolving landscape of the⁢ EV industry. The implications of these setbacks may⁤ extend beyond just the two companies involved,⁢ potentially affecting the perception and adoption of EVs in the ⁤car rental sector as a whole.