EVs No Boon for Car Rentals, Sales

Consider at least twice or maybe even thrice about what you’re climbing into before planning to rent or buy a plug-in electric car or truck any time soon.

Hertz CEO Stephen Scherr is stepping down as CEO after his company's North American fleet accumulation of 60,000 of them resulted in a $245 million hit to its last quarter bottom line.

Hertz now plans to sell one-third of that EV fleet at sacrifice prices due to lackluster public market demand.

In October 2021, just before an initial public offering following emergence from bankruptcy, Hertz had announced plans to buy 100,000 EVs from Tesla with hopes of being on the cutting edge of growing EV demand at the time to attract investors and lift its stock price.

That intent later emboldened Hertz to announce plans to also purchase up to 175,000 EVs from General Motors and 65,000 from Polestar, the EV company co-owned by Volvo and its Chinese parent company, Geely.

Whereas the number of EVs bought by American customers surged 40% last year to top 1 million for the first time, that market has since tanked, subsequently driving down the resale value of both new and used EVs such as those constituting about a third of Hertz’s recent purchases and 11% of their total rental fleet.

In addition, as CEO Scherr reportedly admitted to investors on a 2023 call that even without the drop in value of the cars it bought, Hertz also struggled with collision and damage repair costs, with EVs running about twice that of comparable combustion engine models.

As observed by Daniel Ives, an analyst with Wedbush Securities who follows the EV market, “The execution and marketing of EV’s [by Hertz] was a horror show across the board. It’s a black eye they couldn’t recover from.”

By comparison, profits at rival Avis Budget Group reported record revenue and the second-best adjusted operating profit in its history.

And whereas Hertz was once the world’s largest rental car company, in 2023 its revenue was 22% less than that of publicly held Avis.

EV market rental and sales problems are serious and numerous.

On the rental end, customers have strong reasons for not wanting to drive electric vehicles.

Mr. Ives notes that many people who might consider buying one may be disinclined to risk taking a long EV trip where there may not be an available public charging station where and when needed.

Along likely available routes, many rental customers are also unwilling to allow for substantial extra travel time required for that longer recharging process. Even if they are fortunate to find a station with fast chargers, they can expect to wait in line for hours for one that functions.

Faced with similar disadvantages, private EV purchasers are plagued with additional economic and utility problems.

Despite enormous federal and state taxpayer subsidies and other perk incentives, the up-front cost of EVs is much higher than gasoline models, making them most popular for wealthy urban purchasers who can afford them as second cars for short trips.

Department of Energy data shows that at 2022 year’s-end, California registered 37% of all EVs owned nationwide.

A February analysis of EV purchasers found that 57 percent earned more than $100,000 annually, of whom 75 percent are male, and 87 percent are white.

EVs also increase insurance rates by at least 25% due to more expensive repairs, while depreciating at higher rates than internal combustion cars and trucks.

EV tires also cost more and don’t last as long due to heavy vehicle batteries which can catch fire in collisions.

Any accident that affects those costly batteries can lead to repairs higher than the entire vehicle value which may be totaled with so much as a dent.

To top it off, there’s no longer any financial advantage to EV drivers since they cost more to recharge under many conditions than refueling with gasoline.

Plus, forget about owning an EV in a cold winter climate — or driving to one — which can reduce that mileage by half.

As discussed in my earlier April 3 column, great progress in achieving a government-knows-best central control takeover of formerly free markets arrived in the form of new March 20 EPA tailpipe emission rule that will phase out 70% of gasoline-powered cars by model year 2032.

And whereas EVs currently make up less than 1% of U.S. heavy-duty truck sales, nearly all of them based in California, EPA’s second new rule requires that they comprise 60% of new urban delivery trucks and 25% of long-haul tractor sales by 2032.

Together, these two rules will kill the current industries that supply practical vehicles we want and are fueled by abundant energy we have in exchange for green pipedreams that depend upon Communist Chinese supply chains that provide rare earth materials required for batteries.

But sure, if you really want and can afford an EV to putter around town, then go for it. Besides, if current Biden administration central planning mandates prevail, you may soon have no choice anyway.

More fortunately, you currently do have some say in the matter…an opinion you will voice on your November 2024 presidential and congressional election ballot.