Hertz, Tesla and the Perils of CEO Groupthink

livemint.com:

Hertz announced to much fanfare on Oct. 25, 2021, that it planned to buy 100,000 Teslas. “Electric vehicles are now mainstream, and we’ve only just begun to see rising global demand and interest," then-CEO Mark Fields said.

The share prices of both companies popped, and Tesla’s market capitalization surged past $1 trillion, exceeding the valuations of nearly all traditional automakers combined. C-suite executives praised the announcement. “Kudos to Mark Fields and the Hertz team for steering a great American brand into the electric and connected future," Ford CEO Jim Farley tweeted.

Hertz had emerged from Chapter 11 bankruptcy only a few months earlier. It was betting on electric vehicles to power its revival. Over the next year, Hertz announced plans to buy up to 65,000 Polestars and 175,000 electric vehicles from General Motors.

Hertz featured Tom Brady in ads renting an EV. “Knowing Hertz is leading the way with their electric fleet speaks to how the world is changing and the way companies are approaching being environmentally and socially conscious," the legendary quarterback proclaimed. The market has changed.

Electric-vehicle euphoria has crashed into reality, and Hertz’s bet has gone south. On Jan. 11 the rental-car giant announced it would sell roughly a third of its global EV fleet and use the proceeds to buy gasoline-powered cars.

The cited reasons: weak demand for EVs and high repair costs. Readers might have heard that lower maintenance costs are a major electric-vehicle advantage. As Hertz discovered, the opposite it true.

Even minor accidents can require batteries to be replaced, which can cost $20,000. Many EV parts aren’t readily available, so cars have to sit in the shop for weeks. The bigger problem is