Who Wants 30,000 Used Teslas?

After Hertz revealed it was selling its Tesla fleet at the start of the year, retreating on a commitment to buy 100,000 of the electric vehicles, 34-year-old Irving, Texas data worker Bijay Pandey was pleased. He responded, “I have another vehicle, and I was trying to add one for my wife because gas prices were too high. Finding out it came with a $4,000 tax credit was even better. He said, “That’s what attracted me.” He bought a crimson 2022 Long Range Model 3 with 70,000 miles the day after Valentine’s Day. It costs roughly $25,000, which is good for a $47,000 automobile.

Problems arose quickly. He discovered the car’s voltage was off after receiving a temporary title. A body shop discovered a quarter-size hole in the undercarriage, revealing deeper difficulties. “The high-voltage battery package is damaged and could cause severe safety concerns,” a Tesla technician texted. Since the hole constituted “exterior damage,” the warranty didn’t cover it, costing $13,078.58 to fix. Hertz promised to switch the car for Pandey, but he waited two months and paid $500 on his auto loan before obtaining a replacement. “I discovered why they were trying to get divested of those Teslas,” he stated. If something occurs to a Tesla, the bill is too high.”

Hertz is an early contender for Wall Street’s schlimazel of the decade, the enormous, unlucky lemon that never does anything right. More than four years ago, the rental car industry went bankrupt during the early weeks of the epidemic, weighed down by $19 billion in debt and facing a global travel standstill. Selling its fleet of automobiles to pay creditors, it became one of the first meme stocks, and a surging bull market helped it escape from bankruptcy quickly.

That triumph may have been unfortunate because Hertz had to rebuild its fleet when new car prices were soaring. Hertz said in 2021 that it would make 20% of its cars electric, but it only bought 30,000 Teslas. (It acquired other EVs, but Elon Musk’s business supplied most). Since going public in 2021, Hertz has lost over $12 billion, and its CEO, former Goldman Sachs CFO Stephen Scherr, resigned.

Hertz is now seeking to resolve its Tesla dispute. It seems foolish now. While Hertz makes money by renting cars as much as possible, its vehicles generally have more miles than the average vehicle and require more expensive upkeep. Renting the EVs to Uber drivers, who must drive hundreds of miles a day to earn a profit, further wore down the cars and reduced their resale value. A third of the fleet it plans to sell was sold last month, with 10,000 EVs sold. That appeared to put Hertz ahead of schedule. However, sales are slowing. One Hertz dealer in Smithtown, New York, told me sales plummeted from 30 a week in January and February to five in April. People advise against Hertz cars on online forums. Possible factor: pricing. “Hertz does not provide price haggling,” he stated. It is what it is.”

Hertz initially sold most of its EVs due to weaker traveler demand. “They have an oversupply” of Teslas, said Bank of America analyst John Plimpton Babcock. He said that lesser turnover equaled less profit.

It makes sense for Hertz to sell their fleet today. After a decade of rapid growth, new EV sales are slowing. Auto loan interest rates start at 5% and rise. A lack of dependable charging facilities and concerns about batteries losing power in cold weather has hindered consumer interest in purchasing or renting an EV.

When asked about Tesla sales, a Hertz spokesman conveyed Gil West’s statements that the firm intends to sell out the remaining 20,000 EVs “complete by the end of the year.” For Pandey’s automobile, the firm claimed, “We worked closely with him to deliver a Tesla that met his needs and preference.”

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