Hertz CEO Resigns - EV Fleet Gamble Fails As Tesla Drops Prices

Due to heavy losses incurred in its failed attempt to get into the Electric Vehicle (EV) market, global car rental giant Hertz is reorganising its management structure. Hence, Gil West, former General Motors executive, has been appointed as CEO after Stephen Scherr stepped down.

Among these attempts was an ambitious investment in EVs during Scherr's tenure, which included a high-profile agreement with Tesla for 100,000 vehicles.However, the expected high profits failed to materialise. Despite Hertz's initiative to promote environmental sustainability through its EV programme, it has been unable to persuade customers who are not interested in EVs..

As a result of the lack of demand and Tesla's subsequent price cuts for all of their models, the value of Hertz's EV fleet fell sharply. As a result, the company was forced to sell off a large number of its EVs (20k units), incurring significant losses.

Hertz also invested US$3 billion (RM14 billion) in another vehicle acquisition deal with Polestar during the same time period. This move was also abandoned after both parties agreed that Hertz would not sell their Polestar fleet for less than fair value in order to protect their existing customers' interests.

The decision to abandon the move towards an electrified fleet was strategic, with the goal geared towards lowering costs associated with depreciation and maintenance expenses when compared to petroleum-fueled vehicles.

Furthermore, industry trends indicate that rental car companies are moving away from EVs, with Hertz's European counterpart, Sixt SE, deciding to completely phase out Teslas from its fleet.