Essay by Eric Worrall
Buy Electric, lose your job?
CEO steps down after being hit with expensive EV repairs and low resale prices following purchase of 100,000 Teslas
BY ERIK SCHATZKER, DAVID WELCH, SRIDHAR NATARAJAN AND BLOOMBERG
March 16, 2024 at 10:06 AM GMT+10Hertz Global Holdings Inc. is replacing its chief executive officer in the wake of a disastrous bet on electric vehicles that the company began unwinding in recent months.
Stephen Scherr, who ran Hertz for just over two years after three decades at Goldman SachsGroup Inc., has decided to step down, the rental-car company said late Friday in a statement. It’s replacing him with Gil West, the former chief operating officer of General Motors Co.’s Cruise robotaxi unit. West also will join the board of directors on April 1, according to the statement, which confirmed an earlier Bloomberg report.
Scherr, 59, joined Hertz several months after it emerged from bankruptcy and started making splashy wagers on electric vehicles. Under new owners Knighthead Capital Management and Certares Management, the rental company announced plans to order 100,000 vehicles from TeslaInc., sending the automaker’s market capitalization soaring past the $1 trillion mark at the time.
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Those bets went awry last year, when Tesla slashed prices across its lineup to keep growing vehicle sales. This hammered the resale value of used Model 3 sedans and Model Y crossovers just after Hertz had added tens of thousands of those vehicles to its fleet.
By December, Hertz started selling off 20,000 electric vehicles, or about a third of its EV fleet. Germany’s Sixt SE — a leading car-renter in Europe — is taking even more drastic measures, phasing Teslas out of its fleet entirely.
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Read more: https://fortune.com/2024/03/15/ceo-steps-down-prices-following-purchase-teslas/
WUWT ran a story in January this year, in which we predicted Hertz’s impairment cost for selling used EVs would likely be a lot worse than the $12,250 loss per vehicle they allowed for. Who in their right mind would want a used EV? Especially a used rental EV, which has suffered who knows what abuse?
Remember, any bump, knock or production fault can potentially turn an EV battery pack into a ticking time bomb, capable of napalming any house structure it is unlucky enough to be parked in, that is if it doesn’t BBQ the occupants of the vehicle while on the road.
I guess we’ll know for sure exactly how much Hertz lost on their disastrous EV gamble, when their final EV fire sale numbers are published.
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Fifteen years from now every electric vehicle you see will be worthless.
Fifteen years? You’re optimistic aren’t you? I don’t see them lasting eight years.
What a nightmare, there is plenty of blame to go around.
Scherr joined Hertz several months after it emerged from bankruptcy. The previous managers must take responsibility for the company going bankrupt. Scherr leaves. Hertz then hires West a former COO of General Motor’s Cruze robotaxi unit. What could go wrong there? At some point Knighthead Capital Management and Certares Management take ownership. It doesn’t say whether these two outfits hired Scherr. In any case it was these two management corporations who decided to invest in 100,000 Tesla EVs. Tesla lowers the price on new vehicles making Hertz’s used Teslas even more worthless.
I swear the organizations most in competition with the government for ineptitude is corporations. What a CF.
He deserves this for getting on the EV bandwagon without conducting enough surveys to determine whether there was an adequate enough demand among car-rental customers for EVs in the first place. There’s too much of this nonsense already where academics, environmentalists, bureaucrats, high-pressure salesmen, and politicians, among others, try to establish themselves as authorities on what’s best for the public good. Except the public doesn’t appreciate being treated like children, especially when it has no particular yearning for the product from the outset; and when it’s overpriced and causes inconvenience into the bargain, people become even more resentful of and negative toward it. Yet it’s amazing how long it takes decision makers to come to grips with such facts.
They already knew that there wasn’t the demand amongst the renters; these cars were earmarked for the long-term leases of the Uber type of car-share services (where the demand for EV’s was quite high). Then, after they’d supplied loads of EV’s to that market, they ran straight into the EV write-off problem and had high numbers of their EV’s written off after collisions. Hertz tried restricting the EV’s to the safer drivers but then decided to withdraw many of the EV’s and put them into the rental area where they weren’t popular and then to sell them when that didn’t work. Bad choices, bad timing and a collapsing market (on net totals).
You can set goals but hope is not a strategy-
Ford, GM, and JEEP MADE A HUGE MISTAKE (youtube.com)
Toyota pointed out for the average battery resources of one EV you can have 6 PHEVs or 90 hybrids and they couldn’t see BEVs exceeding 30% of market penetration given different needs. What on earth would the world’s number one carmaker know?
I think 30 % is massively optimistic. They’ll be lucky if it hits half that.
The more people suffer through the EV ownership “experience,” the more reality will drown out the spin.
Uhh-huh-huh-huh…You said “EV FIRE sale.”