Hertz to sell 20,000 EVs in shift back to gas-powered cars

Hertz Global Holdings Inc. plans to sell a third of its U.S. 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 last week 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 allelectric cars in the U.S. EV sales growth slowed sharply over the course of 2023, rising just 1.3% 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 Officer Stephen Scherr said. “Efforts to wrestle it down proved to be more challenging.”

Hertz’s shares fell 4.3% on Thursday. The stock declined 32% 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, Mr. 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 plans to use some of the money raised by selling off EVs to buy gas-powered vehicles.

“The company expects this action to better balance supply against expected demand of EVs,” it said in the filing.

Hertz is keen on GM’s plan to sell cheaper EVs, like a future redesign of the Chevolet Bolt, which sold for under $30,000 before ending production last year, and a $35,000 Chevy Equinox that is going into production. Those vehicles could be easier to rent profitably, Mr. Scherr said.

“We’re committed to the strategy,” he said. “It will take more time to execute it.”