Hertz Global Holdings (OTC:HTZGQ) Inc (NASDAQ:HTZ) revealed during its 3Q earnings call on Thursday that the rental car company has decided to slow the process of electrifying the company’s fleet after EV partner, Tesla's (NASDAQ:TSLA) price cuts kneecapped the resale value of a majority of electric cars in the rental fleet by a third.
“Our in-fleeting of EVs will be slower than our prior expectations,” said Hertz CEO, Stephen Scherr.
Scherr added, “MSRP declines in EVs over the course of 2023, driven primarily by Tesla, have driven the fair market value of our EVs lower as compared to last year, such that as salvage creates a larger loss and therefore greater burden.”
Hertz ended trading Thursday down approximately 10% at $9.04, following the third-quarter update, while Tesla shares experienced a 3% dip, closing at $205.76.
About 11% of Hertz’s entire fleet are electric vehicles. According to Scherr, around 80% of those are Teslas. With an estimated fleet of 50,000 EVs, Hertz's inventory is made up of roughly 35,000 Tesla vehicles. Far less than the original 100,000 Tesla EVs Hertz originally committed to ordering by the end of 2022.
“Our focus and our work with Tesla is to look at the performance of the car so as to lower the risk of incidents of damage. And we’re in very direct engagement with them on parts procurement and labor and the like,” said Scherr.
Scherr mentioned during the call that as the company buys more EVs from various automakers, they anticipate these vehicles to have "a lower incidence of damage" and to incur "a lower cost of parts and labor."
Shares of HTZ and TSLA are up 0.88% and 2.43% respectively in pre-market trading on Friday.