Rental EVs: Such a Painful Experience, It Hertz

AP Photo/David Goldman, File

It was cutting-edge, green-as-all-get-out, ahead of the curve, and wicked cool for bragging rights while it lasted, which wasn't very long. Rental car giant Hertz is still dealing with the aftermath of its badly executed 2021 decision to go all-in on an Electric Vehicle fleet.

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...But the problem for Hertz wasn’t necessarily that the cars were electric, and customers simply do not want to drive electric cars. The problem was how Hertz handled the fleet in general, according to industry analysts.

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

Part of the problem with rental EVs are things we've discussed over and over again here but compounded by the fact that you're in an unfamiliar place, often with deadlines to be somewhere. Maybe you have a flight to catch at a certain time or a meeting you're leaving directly for after you pick up the car. Bad enough that Hertz never built a charging infrastructure at their own offices - you don't have time to hunt down a charging station in a strange city, nor does anyone really want to be wandering the streets at zero-dark-thirty praying they find one.

...By hewing to charging rules the way Hertz has enforced refueling rules, it may have dissuaded customers from wanting to rent an electric car. Without building any charging infrastructure at its rental locations, Hertz may have hurt its own business.

They don’t want to go 20 minutes out of their way at five in the morning to find a charging station,” Ives said.

For the customers who would accept an EV when they got to the rental counter (many of our friends have gone ballistic when told that's what they were getting for a cross, say, Texas jaunt after landing in Dallas or Houston - oh, Hell, no), some have found nasty surprises on their credit card statements when they got the final bill if they dropped the vehicle off. Who needs the hassle of wrangling with the rental company that the EV they stuck you with does not warrant the "returned without a full tank" refueling penalty? Or whatever other weird mumbo-jumbo they want to hit you for.

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...Even though it is obvious that Teslas do not use gasoline, the customer had difficulty convincing Hertz customer service reps to reverse the charge. the company finally apologized for the incident and refunded the customer, blaming a systems error." However, this happened only after auto enthusiast magazine The Drive reported on the fiasco. The spokesperson said the company fixed the glitch.

...One customer received a $341 "Skip-the-Pump" fee for the Model 3 he rented. While he admits he returned the car with a low battery, Hertz should have charged him $25-$35 for a recharge. He tried getting the fee reversed, but like the other renter, customer service wouldn't work with him until he started posting his troubles publicly.

...In another incident, a customer receieved a ridiculous $690.32 bill on top of his $329.83 Tesla Model 3 one-week rental. The nearly $700 in extra billing broke down to several outrageous fees – $475.19 for gas the car doesn't use, a legit $25 EV charging fee, and a crazy expensive $125.01 "rebill" for using the Supercharger network during the rental. For a frame of reference, using a Supercharger to charge a Tesla to 75 percent generally costs about $15.

It was like pulling teeth, but the renter finally got Hertz to refund the incredibly stupid $475 fuel charge, but the 10x Supercharger fee stood...

Hertz knows that rental cars take a beating. What Hertz corporate and CEO Stephen Scherr hadn't counted on was how much repairing the beaten-up rental EVs was going to hit their bottom line.

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Like a proverbial ton of bricks, particularly for a company that had just come out of bankruptcy.

...Even without the drop in value of the cars it bought, Hertz struggled with collision and damage repairs on an EV running about twice that associated with a comparable combustion engine vehicle, Scherr told investors on a 2023 call.

By this past March, the company had about 60,000 EVs in their fleet (of an announced 340K buy) when they called a dramatic halt to their electric ambitions and showed CEO Scherr the door.

Besides trying to raise additional capital to stay afloat, Hertz is now trying to unload as much of its EV inventory as it can. 

...One focus is an effort to dispose of Tesla electric vehicles that the company bought, only to discover customers were reluctant to rent them and the cars had high repair costs.

The century-old business burned through $860 million in the last two quarters, when it announced that a bet on electric vehicles had become a drag on profits...

The EV maintenance costs alone are eating the company alive.

...Why It Matters: The company is now looking to remove 30,000 electric vehicles from its fleet, significantly higher than the number announced earlier this year, as their repair and operating costs proved too high to eke out profits.

"We're tackling both issues – getting to the right supply of vehicles at an acceptable capital cost while at the same time driving productivity up and operating costs down," Hertz CEO Gil West said in April.

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Analysts are calling it a "fire sale." 

EV slump, Hertz fire sale take used Teslas to ‘no haggle’ $25,000 price

If one is willing to gamble on an EV that has been a rental, the prices are pretty tempting. Having purchased a lease turn-in ourselves - which one would think would have been treated much better than a rental - I have a cold chill running down my spine at the thought. YMMV

CAVEAT EMPTOR

The race to the $25,000 EV in the U.S. car market has been won, but not in the way the auto industry wanted.

Since January, Hertz Global Holdings has been in Tesla sales mode, with 20,000 electric vehicles from its global fleet, representing nearly a third of the rental-car company’s existing EV inventory, on the dealer lot. The move, viewed as a stumble in Hertz’s EV strategy — in 2021, it heralded plans to order hundreds of thousands of Teslas, Polestars and battery-electric GM models — also reflects a sobering up of the electrification hype within the U.S. auto industry, which has run into a consumer in 2024 spurning at least the expected pace of the transition away from gas-powered cars.

...On the plus side, Hertz has plenty of EVs that it’s motivated to sell at what it calls no-haggle prices. “Our EVs can be found nationwide in most major metros and averaging around $25,000,” said a Hertz spokesperson in an email. All of the Hertz-certified vehicles are given a 115-point inspection and include a 12-month/12,000-mile (whichever comes first) limited powertrain warranty. Hertz also offers vehicle protection plans that last beyond the warranty, as well as a seven-day or 250-mile buy-back guarantee. Hertz, like most used car retailers, offers trade-ins and financing. Also, some used EVs are eligible for up to $4,000 in federal tax credits, and several states offer tax credits or rebates. 

On the minus side, although the Hertz late-model EV fleet is only a couple of years old, the cars have been frequently rented, so the mileage can be relatively higher compared to other used vehicles. That could mean more wear and tear, since there’s no telling how aggressively they’ve been driven.

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All of this - from EV price wars to slumping sales to fleet vehicle dumping - is significantly impacting the resale value of used EVs. It's great if one is looking to get a toe wet and try EVs out, but it's awful if one is hoping to unload that $70K+ vehicle you bought two years ago and not lose your shirt.

  • Used EV prices plummeted by as much as 31.8% this year, according to automotive research firm iSeeCars.

EVs continue to be a hard sell to Americans and the longer they're in the marketplace for people to become familiar with their advantages, quirks, and true costs, they don't seem to gain any ground. In fact, they've slipped in favorability.

Americans continue to be fans of gasoline-powered vehicles and prefer them to electric vehicles (EVs) and hybrids, a new study by KPMG has shown.

Assuming all costs and features are the same, just 21% of consumers prefer an EV, the inaugural KPMG American Perspectives Survey found.

In countries where EVs have almost become mainstream, there's a general sense of dissatisfaction. Thanks to pushbacks against EU regulations of the production of ICE vehicles, drivers are returning to what they know and love.

Half of German electric car owners regret their purchase or leasing

The electric car industry is in crisis. A recent YouGov survey shows that more than half of German electric car owners regret their purchase or leasing. The main reason is rising electricity prices. In contrast, other car sectors are experiencing an upswing, as current figures from the Federal Motor Transport Authority in Flensburg show

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Nothing has changed my opinion - and the pretty expensive Hertz debacle has only served to reinforce it - that EVs have their place as does any niche vehicle. But they are not "the future." 

They are only a part of it.

The growing retreat from mandates, the retrenchment in manufacturing, the lack of progress in any sort of significant national infrastructure to support them, the growing familiarity with their limitations and overpromised/unrealized benefits, and the fragile state of our own quivering electrical grid are all serving to shore up your average consumer's belief that these are neat if you can afford one and it makes sense for your particular situation.

Otherwise, don't be telling us what to drive while twisting the market so we haven't a choice.

We know what works and what we like.

We can be stubborn when we're pushed.

You think they'd learn.

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John Stossel 5:30 PM | July 13, 2024
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