Hertz has recently increased the sale of its Tesla vehicles. Struggling, the company plans to sell tens of thousands of them this year. This decision was motivated by the steep drop in their value.
In 2021, Hertz launched an ambitious fleet electrification initiative by purchasing 100,000 Tesla Model 3 vehicles. Subsequently, the company also added Model Y to its order to further increase the percentage of electric vehicles. The goal was to be a pioneer in the electric vehicle sector. This initiative was well received by the rental company’s customers. However, the grace period did not last long.
Hertz was too greedy
Indeed, when Tesla started lowering the prices of its Model 3 and Model Y between 2022 and 2023, Hertz was disappointed. This fluctuation led to a significant decrease in the resale value of the two electric models. This was a blow to Hertz, whose financial viability relies on maintaining the value of its fleet. With its 100,000 Teslas, the rental company bit off more than it could chew.
For example, in 2020, a Tesla Model 3 retained up to 90% of its value after 3 years. However, between 2021 and 2023, the vehicles lost nearly 50% of their value. The Model Y experienced an even more severe depreciation since its peak in 2022. In response to this situation, Hertz announced earlier this year its intention to sell around 20,000 Teslas to mitigate losses.
Today, the company revealed that it plans to accelerate the sales. Hertz now anticipates the removal of these Teslas from its fleet by the end of next year, aiming for a standardized monthly depreciation of $300 per vehicle by the end of 2025. Currently, the monthly depreciation per unit is $600.
This timing is very unfortunate for Hertz, especially due to high interest rates and economic slowdown that led Tesla to reduce its prices.