Failed gamble on electric vehicles has cost Hertz CEO his job

[DragonSlayer101]

In context: Electric vehicle sales in the US have increased exponentially over the past few years, but people still stick to traditional gasoline-powered cars when they rent. Consumers' unwillingness to rent EVs has cost at least one high-profile CEO his job.

Hertz CEO Stephen Scherr is stepping down from his position at the car rental company following a $348 million loss last quarter. According to CNN, it is the firm's most significant quarterly loss since 2020. A fair portion of the downfall stemmed from Scherr's failed bet on EVs.

Gil West, former chief operating officer of Delta Air Lines and GM's Cruise division, will step into Scherr's vacancy. He will be Hertz's fifth boss in four years and must hit the ground running if he hopes to pull the company out of trouble and steer it to profitability.

Scherr made a series of contentious moves, including committing to acquire 100,000 Teslas in 2021 shortly after the company completed bankruptcy proceedings. He also announced plans to buy up to 175,000 electric cars from GM and 65,000 from Volvo's Polestar division. Ultimately, the company only bought 60,000 electric cars before pulling the plug on its EV plans.

The stunning 180 was sparked by Tesla repeatedly slashing the prices of its most popular models over the past year, sending their resale values plummeting. Saddled with a fleet of depreciating assets and renters unwilling to try out battery-powered vehicles, Hertz announced in January that it was selling 20,000 EVs from its fleet to reduce its liabilities. The company expects to take a $245 million hit related to the sale due to depreciation.

Wedbush Securities EV Analyst Daniel Ives suggests that consumer skepticism was part of Scherr's EV venture's failure. A significant number of people are biased toward internal combustion engines. Another factor is that even folks who own an electric car wouldn't necessarily want to rent one when traveling, especially on long trips. Electric vehicles require specialized charging stalls, which are still not as widely available as traditional gas stations.

As if that wasn't bad enough, Scherr discovered that repairing EVs is much more expensive than fixing internal combustion cars. Since purchasing electric vehicles is more expensive, the added maintenance costs hit the company like a one-two punch. So, with the new high-tech fleet's value in the tank for lack of used EV demand, Scherr's fate was sealed.

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https://www.techspot.com/news/102333-failed-gamble-evs-cost-hertz-ceo-job.html

 

[mbk34]

Weird, I'd be quite tempted to hire a Tesla if the choice was available and it was easy (and cheap) to charge them up at both the hire place and at my destination. It would also be a good way for Tesla to demo their cars to people who aren't quite ready to put money down on an EV. It should also work for the hire company as these vehicles are almost maintenance free and it's easy to limit their performance so people who hire don't just spend all their time doing drag runs in ludicrous mode.

 

[m4a4]

If I was renting a vehicle, it would be for a roadtrip of sorts. And the last thing I want to deal with is figuring out where I can charge my rental along the route (along with waiting for it to recharge).

EV tech still isn't good enough to want to bet on them for those types of rentals. Plug-in hybrids would be what I'd bet on.

 

[Squid Surprise]

Crazy move for a rental company. EVs are only great if you use them within a city and have a charging station at home or work (or both).

People who rent cars most likely won't have a charging station at "home" (unless they stay at one of the very few hotels that have one) and will often be driving long distances - which would make an EV inconvenient.

 

[yRaz]

The worst part is that consumers are asking for plug in hybrids, not full electric cars. This is another case government over regulating. The idea that we won't have any gas powered cars by 2030 is just absurd. People have shown that they just won't buy them. People will be more likely to maintain an ICE vehicle if the only option for a new car is full electric. That's not to mention that the electric grid can't handle 100 million electric cars charging.

 

[Neatfeatguy]

"Scherr discovered that repairing EVs is much more expensive than fixing internal combustion cars. Since purchasing electric vehicles is more expensive, the added maintenance costs hit the company like a one-two punch."

I'm sorry, but Scherr is a mor0n. It has been common knowledge for a good long while (before they snatched up 60k EVs) that insuring and repairing EVs is much more expensive over ICE vehicles.

Horrible business decision to go that heavy into EVs. EVs should have been limited to places that tend to deal with them more, such as CA and FL on a small scale to see how they're perceived. Something the company could easily absorb should it go belly up. Hertz did a good job dropping this chump.

 

[Theinsanegamer]

Weird, I'd be quite tempted to hire a Tesla if the choice was available and it was easy (and cheap) to charge them up at both the hire place and at my destination. It would also be a good way for Tesla to demo their cars to people who aren't quite ready to put money down on an EV. It should also work for the hire company as these vehicles are almost maintenance free and it's easy to limit their performance so people who hire don't just spend all their time doing drag runs in ludicrous mode.

Well, given that 99% of the time your destination is NOT going to have easy and cheap, or even present, charging capability, that's a bit of an issue isnt it? Given most car renters are not going to be native to the area, they would have no idea where to even find chargers, assuming there are any where they are going.

EV rentals are a plain crazy idea.

"Scherr discovered that repairing EVs is much more expensive than fixing internal combustion cars. Since purchasing electric vehicles is more expensive, the added maintenance costs hit the company like a one-two punch."

I'm sorry, but Scherr is a mor0n. It has been common knowledge for a good long while (before they snatched up 60k EVs) that insuring and repairing EVs is much more expensive over ICE vehicles.

Horrible business decision to go that heavy into EVs. EVs should have been limited to places that tend to deal with them more, such as CA and FL on a small scale to see how they're perceived. Something the company could easily absorb should it go belly up. Hertz did a good job dropping this chump.

We are stuck on an infinite loop of rediscovering what the common man already knows, burning billions of $ in the process.

 

[Dreadcthulhu]

As we all know electric cars tend to have a higher initial costs than gas ones, but lower 'fuel' costs (as electricity is cheaper than gas). This is of course bad for a rental company, as they have to pay that higher initial cost, but are not the ones paying for the fuel, that would be the people renting, so they get no savings from that. Those cheaper fuel costs also attracted a bunch of high use, basically commercial renters - Uber, Lyft, Doordash, etc, who put a lot more wear & tear on cars than the normal renter, leading to that much higher than expected repair costs.

 

[brucek]

The majority of my lifetime car rentals were for business travel, and were arranged by (vendors to) my employers, typically with little to no input from me. It's hard to see how electric could do well in that segment. The arranger has no idea of my comfort level of finding and using chargers, and probably has no immediate idea of their availability at my itinerary destinations. Gaining more knowledge about that would require time, and the last thing the arrangers are looking for is to spend more minutes per itinerary arranged. Selecting the gas vehicle is always going to be a safe choice even if the driver would have preferred electric; whereas selecting electric and being wrong about the applicable circumstances is going to get someone in trouble.

 

[Endymio]

Those promoting EVs as "the next great thing" should be aware that, in 1910, EVs were more prevalent on the streets of NYC than gas-powered automobiles. The problems that caused them to die out then still have yet to be fully addressed: range and charging time.

 

[brucek]

Another issue is turnaround time between rentals. Many renters prefer the convenience of having the rental company refuel the car. Even assuming the rental car company had enough super-charging stations so there's one station per car in turn-around even at peak times (that's a lot of stations! - not sure how realistic that is), it's still a lot of extra minutes at peak times at which inventory is down for charging compared to the time to refuel with gas.

 

[VariableSpike]

Clearly the CEO had no idea what he was doing on multiple fronts, from fleet management (downtime and turnaround costs on a fleet of electric cars being used by people in all sorts of ways will be way more expensive and annoying, especially with the astronomical costs of batteries), availability if chargers, the fact that people rent cars on holiday for longer trips, and unlike normal residential owners, there is no guarantee of what would be charging at home overnight, driving patterns not matching what you would nornally expect, cost of vehicle purchase etc. etc.

 

[p51d007]

If you live in a city, an EV would be a "good" choice. That is if the charging stations are numerous.
If you live in "the country", NOT such a good idea. Plus, if you live in an area of the country that is
super cold in the winter, NOT a good idea.
But, government WANTS everyone to live within a 15 minute city, so they wouldn't need a car. Just
walk, bike or take a bus/train.
EV's shouldn't be FORCED by government mandate onto people. We should have the freedom to
choose what we prefer. Let the FREE market make the choice between EV or ICE. But, we don't have
the FREEDOM to do that, with government encroaching on our lives. We can't even drill for our own
oil/gas because it might hurt the environment, but, it's ok to disturb millions of acres of land, to pull out
enough rare earth minerals for batteries, which costs 1/2 the cost of the vehicle to replace in a few years.

 

[koblongata]

It should be, quarterly performance costed his job, his decision was right, chargers are growing exponentially, people will want to rent EVs instead very soon.

 

[Eldrach]

Well - probably a bad idea for a country like the US with a fairly poor infrastructure for EV’s.
Here in Norway - renting an EV would only be natural, as we have charging stations everywhere.

 

[Endymio]

Well - probably a bad idea for a country like the US with a fairly poor infrastructure for EV’s.
Here in Norway - renting an EV would only be natural, as we have charging stations everywhere.

Except that Norway also has a chilly climate, reducing EV range by 20-30%, and those on business or tourist trips rarely wish to carve out hours of that charging. And if you're visiting Norway from abroad for the first time, look forward to spending many hours more creating up to 10 different accounts to pay for those charging stations:

"...paying for [EV charging in Norway] is actually a bit of a hassle – especially the first time. The reason for this is because there’s about 10 different companies that provides the charging stations, and you typically need to either make an account or download an app to use their chargers...."

 

[Eldrach]

Except that Norway also has a chilly climate, reducing EV range by 20-30%, and those on business or tourist trips rarely wish to carve out hours of that charging. And if you're visiting Norway from abroad for the first time, look forward to spending many hours more creating up to 10 different accounts to pay for those charging stations:

"...paying for [EV charging in Norway] is actually a bit of a hassle – especially the first time. The reason for this is because there’s about 10 different companies that provides the charging stations, and you typically need to either make an account or download an app to use their chargers...."

Well - if you’re renting a Tesla, you just plug it in at a Tesla supercharger, and that’s it. You’ll get the charge cost added to the end bill by Hertz. And you don’t loose 20-30% range in cold weather with a Tesla if you’re driving over longer distances in the cold (short distances in a non-prewarmed car, yes). 10-15% on longer trips in Snowy weather. So quite easy

 

[Neatfeatguy]

It should be, quarterly performance costed his job, his decision was right, chargers are growing exponentially, people will want to rent EVs instead very soon.

 

[Disiw]

If I was renting a vehicle, it would be for a roadtrip of sorts. And the last thing I want to deal with is figuring out where I can charge my rental along the route (along with waiting for it to recharge).

EV tech still isn't good enough to want to bet on them for those types of rentals. Plug-in hybrids would be what I'd bet on.

Plug-in hybrids are dying off. They are not green at all with tons of issues down the road. It is essentially two cars in one, in terms of electronics = More stuff will break eventually.

 

[Disiw]

Well - probably a bad idea for a country like the US with a fairly poor infrastructure for EV’s.
Here in Norway - renting an EV would only be natural, as we have charging stations everywhere.

In US you drive 100s of miles, easily running out of battery on most EVs, even with a fast charger it would be dreadful really.

 

[Eldrach]

In US you drive 100s of miles, easily running out of battery on most EVs, even with a fast charger it would be dreadful really.

Naw, I mean - a full charge on a Tesla Model Y long range will net you around 270-280 miles. Which usually means a good 3-4 hours of driving. Charging from 10-80% on 250kw charger takes around half an hour - which is a pretty normal stop after 4 hours of driving - then you’re good for another 230-240 miles. It’s all about the infrastructure though. Weak chargers, long distances between chargers etc is a total showstopper.

And just for reference: I drive a model y long range - and I’ve driven hundreds of miles with 0 issues - the trip planner will optimize my charging stops and keep it super efficient

 

[Disiw]

Naw, I mean - a full charge on a Tesla Model Y long range will net you around 270-280 miles. Which usually means a good 3-4 hours of driving. Charging from 10-80% on 250kw charger takes around half an hour - which is a pretty normal stop after 4 hours of driving - then you’re good for another 230-240 miles. It’s all about the infrastructure though. Weak chargers, long distances between chargers etc is a total showstopper.

And just for reference: I drive a model y long range - and I’ve driven hundreds of miles with 0 issues - the trip planner will optimize my charging stops and keep it super efficient

I never stop for 30 minutes and if you do this in rush hour, vacation time, there will be waiting in line to charge too. Also your route will be limited / altered if you need to hit those fastchargers in many countries. So yeah infrastructure needs improvement but charging time as well.

I have an EV but I also have a Diesel for this exact reason, I can drive for 600-700 miles, stop for 2 min and repeat if I want, I often take a 10-15 min break tho.

This is exactly why EV needs even faster charging and longer range. I can't let my Diesel go yet. The freedom is gold.

 

[Eldrach]

I never stop for 30 minutes and if you do this in rush hour, vacation time, there will be waiting in line to charge too. Also your route will be limited / altered if you need to hit those fastchargers in many countries. So yeah infrastructure needs improvement but charging time as well.

I have an EV but I also have a Diesel for this exact reason, I can drive for 600-700 miles, stop for 2 min and repeat if I want, I often take a 10-15 min break tho.

This is exactly why EV needs even faster charging and longer range. I can't let my Diesel go yet. The freedom is gold.

The trip planner will only advise you to charge for 30 min if there’s a big distance between superchargers - usually it says «charge for x amount of minutes« - usually between 10-12. But dude, you drive 7 hours with only a 10 min stop? You pee in a bottle or what?

 

[bviktor]

Thank Musk.

 

[Disiw]

The trip planner will only advise you to charge for 30 min if there’s a big distance between superchargers - usually it says «charge for x amount of minutes« - usually between 10-12. But dude, you drive 7 hours with only a 10 min stop? You pee in a bottle or what?

Nah, I do several stops with 5-10 min instead of a loooong break just waiting to charge