Hertz to sell one-third of EV fleet in shift back to gas-powered cars

financialpost.com:

Hertz Global Holdings Inc. plans to sell a third of its United States electric vehicle fleet and reinvest in gas-powered cars due to weak demand and high repair costs for its battery-powered options.

The sales of 20,000 EVs began last month and will continue over the course of 2024, the rental giant said Jan. 11 in a regulatory filing. Hertz will record a non-cash charge in its fourth-quarter results of about $245 million related to incremental net depreciation expense.

The dramatic about-face, after Hertz announced plans in 2021 to buy 100,000 Tesla Inc. vehicles, underscores the waning demand for all-electric cars in the U.S. EV sales growth slowed sharply over the course of 2023, rising just 1.3 per cent in the final quarter as consumers were put off by high costs and interest rates.

“The elevated costs associated with EVs persisted,” Hertz chief executive Stephen Scherr said. “Efforts to wrestle it down proved to be more challenging.”

Hertz’s shares fell 4.3 per cent to US$8.95 as of 10:01 a.m. in New York. The stock declined 32 per cent last year.

Going forward, Hertz will keep a close eye on EV demand both at dealerships and within its own operations to decide whether the company should buy more vehicles, Scherr said. That means its agreement to buy 175,000 EVs from General Motors Co. over the next four years and another 65,000 from Polestar may take much longer to complete, he said.

“Hertz recorded elevated costs from its EV fleet in 2H23. Management said the reversal could boost free cash flow by US$250-300 million in 2024-25 and improve corporate Ebitda, but we see the reshuffling as material growing pains.”

Hertz plans to use some of the money raised by selling off EVs to buy gas-powered vehicles. “The company