Europe’s biggest car rental company Sixt SE, is reportedly phasing out Tesla Inc TSLA EVs from its fleet for the same reasons as American car rental company Hertz Global Holdings Inc HTZ.
What Happened: Sixt is looking to reduce the Tesla vehicles in its fleet owing to the higher repair costs of electric cars as compared to combustion engine vehicles coupled with lower resale values, Bloomberg News reported, citing an email sent to customers.
Despite backtracking on the U.S. EV giant, the company still intends to electrify as much as 90% of its European fleet by the decade’s end.
Why It Matters: American car rental Hertz flagged similar concerns in October. Hertz announced its intention to scale back its EV fleet, especially Tesla vehicles, during its third-quarter earnings call. The company cited higher collision and damage repair costs for EVs compared to traditional vehicles, impacting results in the last quarter and negatively affecting EBITDA.
Hertz CEO Stephen Scherr explained that the decline in the Manufacturer's Suggested Retail Price (MSRP) of EVs, particularly Tesla, throughout 2023 led to a lower fair market value for Hertz's EVs compared to the previous year. This decrease resulted in larger losses and higher burdens in the event of salvage, negatively affecting EBITDA. Scherr emphasized that the third-quarter EBITDA margin would have been significantly higher if the entire fleet were traditional combustion engine vehicles.
Hertz expressed its plans to purchase EVs from other manufacturers with established part supply networks at lower price points. Although the company initially aimed for 25% of its fleet to be electric by the end of 2024, Scherr clarified that it's not a rigid timeline.
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