Major car rental firm sells off cheap unwanted Teslas as mammoth losses of $392m are revealed

Rental giant Hertz reported losses of $392 million in just the first three months of 2024 - as it announces plans to sell another 10,000 depreciating EVs on the cheap.

The rental company bet big on electric cars back in 2021 when it ordered 100,000 Teslas and 50,000 Polestars in a bid to electrify its fleet. 

But the bet failed - customers had little interest in renting them due range anxiety and uncertainty around charging in unknown places.

Hertz had already announced plans to sell 20,000 EVs and will now offload 10,000 more. But the plummeting value of Teslas - due to falling demand for EVs and price cuts on new cars - mean the firm is selling them at a huge loss.

Announcing the dire first-quarter earnings on Thursday - which plunged shares to a record low - Hertz also revealed it lost $195 million on EVs alone in that period. 

Hertz has continued racking up losses as it looks to offload depreciating EVs from its fleet

Shares in Hertz tumbled some 20 percent on Thursday after it announced its results. Its share price has now fallen about 55 percent since the beginning of the year

Tesla Model 3 sedans from 2023 were on sale for $28,000 this week. They currently start at around $40,000 new.

Hertz's share price was down about 20 percent on Thursday - trading at around $4.64 at 2pm ET. They were down 23 percent at 10.55am ET to a record low of $4.48. 

This year stock has tanked 55 percent.

'Fleet and direct operating costs weighed on this quarter's performance,' said Gil West, Hertz's new chief executive officer in a statement accompanying the first-quarter results.

'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,' West added. 

In the midst of the crisis, its previous CEO Stephen Scherr stood down last month.

Earlier this year, the company moved to sell a batch of around 20,000 electric cars and planned to reinvest in gas vehicles after determining 'that the supply of EVs exceeded customer demand.'

In its most recent earnings report, the company indicated it has since sold half of them for at a loss of $41 million. It then incurred another $40 million loss in marking down the other half of the cars it still needs to sell to fair market value.

The rental company reported in its filing on Thursday to the SEC that it had now identified a second batch of 10,000 EVs to sell. Their value was written down by $114 million in the process.

Losses on EVs therefore totaled $195 million - almost exactly 50 percent of the company's overall losses over the quarter.

In the midst of the ongoing crisis at Hertz, the rental company appointed a new CEO, Gil West 

Hertz still has around 3,000 EVs listed for sale on its used-car site

Hertz said its depreciation costs had therefore reached $592 per vehicle per month, well above that usually seen on gas vehicles in rental operations.

The company still has around 3,000 EVs listed for sale on its used-car site. 

'In response to management's determination that the supply of EVs in the Company's fleet continued to exceed customer demand, elevated EV damage and collision costs and a decline in residual values, the Second EV Disposal Group was classified as held for sale as of March 31, 2024,' read the filing.

Collision costs are also an issue, the company said. EV crashes are generally significantly more expensive than those of gas cars.