Car rental company Hertz has announced plans to sell thousands of its electric vehicles and replace them with gas-powered cars.
The Florida-based business announced its plans in a filing with the Securities and Exchange Commission on Thursday (11 January), in which it stated it had begun offloading the electric cars late last year.
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The news comes two years after Hertz announced in 2021 that it had spent $4.2 billion on 100,000 Teslas.
At the time, then-Interim CEO Mark Fields said: "When you look over the next 12 to 36 months, I think there's gonna be about 100 EV models coming into the marketplace.
"So you have this combination of customer intent or predisposition rising, and you have the products coming."
Now, however, Hertz has pointed to higher repair costs as a factor in its decision to sell off 20,000 of its electric vehicles, which amounts to approximately one third of its global fleet.
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Hertz wrote in the filing: "While direct operating expenses per transaction day, excluding collision and damage, will be flat for the quarter and down for the year, expenses related to collision and damage, primarily associated with EVs, remained high in the quarter, thereby supporting the Company's decision to initiate the material reduction in the EV fleet."
As well as Teslas, Hertz has Chevrolet Bolts and Volvos in its fleet of electric cars, many of which are already up for sale online.
The company plans for the sale of the cars to 'take place in an orderly fashion over the course of 2024'.
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"The Company further anticipates that incremental free cash flow generation related to this action will approximate $250 million to $300 million in the aggregate over 2024 and 2025," it said.
To replace the electric vehicles, Hertz announced plans to add ICE vehicles to its fleet - cars which ignite and combust fuel.
However, the company will look to implement a 'series of initiatives' to 'continue to improve the profitability of the remaining EV fleet'.
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Initiatives include an expansion of electric vehicle charging infrastructure, growing relationships with the manufacturers of electric vehicles, and continued implementation of policies and educational tools to enhance the electric vehicle experience for customers.
By selling the cars, Hertz anticipates an improvement in its earnings for 2024. However, after it announced the sale of the electric vehicles, shares in the car rental company fell by as much as six percent in premarket trading.
Topics: Electric Cars, Cars, Technology, Money
Emily Brown