Hertz CEO's Bold Move into EVs Fails to Yield Results

Amidst the fallout from Hertz's significant investment in Tesla and other electric vehicles, CEO Stephen Scherr has chosen to resign.

In 2021, Hertz made headlines by unveiling plans to purchase 100,000 Teslas and substantially increase its electric vehicle fleet. This move, occurring only six months after a $4.2 billion restructuring prevented the company from bankruptcy, led to a 40% surge in the brand's stock price within two weeks. Fast forward two and a half years later, Hertz is now offloading many of those EVs at significantly reduced prices, with its stock trading at only 20% of its 2021 peak.

Nevertheless, the value of EVs, particularly Tesla models, plummeted, exacerbated by continuous price reductions throughout much of 2023. As a result, Hertz incurred losses of nearly $250 million attributed to these price drops, prompting the company to opt for outright sales of some units.

Hertz joins a growing list of automotive behemoths grappling with the consequences of early investments in EVs not panning out as expected. The rental car giant faced significant challenges stemming from low demand among renters and soaring repair costs from suppliers. Consequently, Hertz has revealed intentions to offload 20,000 units from its EV fleet. This announcement compounds the company's woes as it initially heavily invested in Tesla inventory when the electric carmaker's prices were at their peak, only to decide to sell amid Tesla's aggressive price cuts, which have significantly impacted the resale value of its previous models.

Scherr will step down from his role as CEO and as a member of the Board of Directors effective March 31. He will be succeeded by Gil West, the former Chief Operating Officer of both Delta Airlines and GM's Cruise self-driving unit.