Tesla and Hertz tumble as the car-rental company backs down from a big bet on EVs
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- Shares of Hertz and Tesla declined Thursday after the car-rental company pulled back from its EV push.
- Hertz said it will sell about 20,000 electric vehicles and buy more internal-combustion-engine cars.
- Hertz ordered 100,000 Teslas in 2021 for its rental fleet, but has seen waning demand.
Shares of Tesla and Hertz both tumbled on Thursday after the car-rental company said it would sell roughly one-third of its electric vehicle fleet.
Citing weak EV demand, Hertz said in a regulatory filing it would use the sale proceeds from off loading 20,000 EVs to purchase internal-combustion-engine cars.
Tesla stock fell 2.94%, and Hertz Global Holdings declined 4.28%.
The announcement marks a significant reversal for Hertz, which previously had a goal of electrifying one-quarter of its entire fleet by this year.
The filing said the company still plans to offer EVs, but it will focus on matching its vehicle supply with demand. Meanwhile, Hertz has had to grapple with higher repair costs for its electric vehicles, and Tesla's price cuts have hurt the value of its fleet.
Hertz will log a $254 million incremental net depreciation expense on the sale, and the sales are expected to wrap up by 2025.
In 2021, the company placed an order for 100,000 Teslas, reinforcing its lofty bet on electrification. At the time, it was the largest single purchase of EVs.
Alongside the likes of Amazon, Best Buy, and DHL, Hertz was part of a deal with the Corporate Electric Vehicle Alliance that aimed to facilitate the purchase of at least 330,000 EVs before 2027.
Tesla, for its part, just updated its Model 3 for the first time in years, and it recently began deliveries for its Cybertruck. However, Chinese automaker BYD recently overtook Tesla as the biggest seller of EVs in the world.