03.27.24
Many Articles recently listed pretty much everything possible to prove that Elon Musk doesn't always win, Toyota's bet against BEV is paying off, customers are choosing ICE and Hybrid over BEV, BEV's are rotting on the lots, despite incentives, despite Manufacturers heavy discounts ... BEV's must be a fad.
Recently Hertz CEO stepped down, media was associating it with Tesla's 100k November 2021 deal announcement.
IMO, this is a short vision and distorted analysis.
Hertz never actually bought 100k Cars from Tesla. Nor did it buy 65k Polestar or 175k Chevy Bolt as it intended.
At the end of 2023, Hertz owned around 35k Teslas, and 15k more Bev's from Polestar, Volvo, and Chevy Bolt.
Hertz started downsizing the BEV push for several reasons that relate to Business decisions, not to a choice of "Better", or even "cheaper" or more "efficient" car choice.
Hertz bought Tesla cars at peak 2021-2022 prices without discount. Now these cars are offered new at nearly 35% less after the rebate.
Hertz must sell them anyway now 2 years later, as they sell any car, and the prices they are getting are very low accordingly both due to price deflation after the COVID Supply Inflation, and due to high mileage.
Any cars Bought in 2022, lost more value than normally in the last 2 years. Dealers charged then $5-10k markups, and today $5-10k off MSRP.
Maybe in 2022 Hertz was denied discounts from ICE since demand was through the roof.
If Hertz did buy more Teslas cars today, they would have gotten them at 35% less, dollar cost averaging the next 2 years depreciation for sure.
Hertz decided to sell at a loss and not take advantage of extremely low prices to buy more.
Hertz has many other reasons for this shift:
- They decided to partner with UBER at very affordable rates, a very popular move that benefited UBER and Uber drivers, but not Hertz, due to low pricing, heavy mileage use and heavy wear.
- Many Hertz fleets Tesla's 2 year old cars are sold by Hertz with 70-80k miles on them which explains lower prices way out of warranty.
- Many Consumers did not get sufficient info on operation, mostly charging, causing unnecessary service calls and discomfort.
- Renters of Non Tesla EV's and Uninformed Tesla renters found it hard to use Non Tesla Fast chargers and access their networks (In 2025 this problem is fully solved by access to Tesla's network for all BEV's).
- In 2021 ICE companies did not offer very compelling purchase deals to Hertz for ICE cars since the demand was high and the supply low, so Tesla did not seem so much more expensive.
- In 2024 I am sure ICE cars are offered to Hertz at Old bargain prices, that seems very tempting even after Tesla price drops.
- The BEV sector is wrongfully referred to as One in terms of Demand, Ease of Charging, Affordability, Price cuts and days on lots.
They are separate sectors Tesla and Other BEV.
- Tesla's high demand, high production rate, Affordability after heavy price cuts and rebate, Ease of Charging, 15 days on dealer lots are not at all extended to other BEV's.
- Some of these advantages were favored by informed consumers, but did not benefit Hertz Financials:
1. Ease of charging on Supercharger network.
2. Low cost of operation vs ICE.
3. Hertz Consumers are introduced to Affordable Bev's in 2023-2024.
- After heavy use by Consumers at too low prices, although maintenance was very low, repairs were high.
Both repairs for accidents since Hertz is self-insured and after warranty failures surprised Hertz with lack of Parts access and high parts cost.
- Hertz as a business with a 2 year cycle for cars and therefore a short-term vision, probably should not have taken the BEV route in the first place, or perhaps not at such high purchase prices in 2022, not Uber partner at such low prices...
Anyway, it probably was the right business decision, returning to a proven business concept with heavily discounted ICE cars.
Hertz tried to make a loud, unique statement after bankruptcy and in a competitive market.
Maybe Hertz enjoyed the EV marketing push for a while, but due to a series of circumstances, this strategy proved - Un-beneficial.
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