Car rental company Hertz Global Holdings HTZ has sparked a debate among Tesla Inc TSLA enthusiasts with its decision to sell around 20,000 electric vehicles, including Teslas, from its fleet. The move has led to conflicting views even among Tesla bulls.
What Happened: Wedbush analyst Dan Ives called Hertz’s decision a “black eye moment” for the rental company, but he downplayed the impact on Tesla.
Ives, speaking on CNBC’s “Last Call” show, criticizes Hertz for mishandling the marketing of these electric vehicles and miscalculating the implications of incorporating EVs into its fleet. Despite this, Ives believes the news will not significantly affect Tesla’s short-term sales, considering it a mere “blip on the radar.” He maintains a bullish outlook on Tesla for the year 2024.
On the other hand, Ross Gerber, president of Gerber Kawasaki Wealth and Investment Management and a Tesla investor, sees Hertz’s decision as another setback for the electric vehicle giant.
Gerber pointed out the financial impact on Hertz, noting that the company is selling off a third of its Tesla fleet, resulting in a $250 million loss in the value of their Teslas. “Now further reducing after-market pricing as the free fall in the value of the Tesla brand continues,” he wrote on X.
Why It Matters: Hertz announced its plan on Thursday to sell approximately 20,000 EVs from its U.S. fleet throughout 2024, citing high repair costs as the driving factor.
The company intends to replace these electric vehicles with combustion engine-powered cars. This decision aligns with Hertz’s previous announcement during its third-quarter earnings call, where CEO Stephen Scherr highlighted the financial advantages of a fleet consisting mainly of traditional combustion engine vehicles. Although Hertz initially aimed for 25% of its fleet to be electric by the end of 2024, Scherr emphasized that this timeline is flexible.
As of the end of the third quarter, EVs comprised 11% of Hertz’s total fleet, with Tesla representing four out of every five EVs in their lineup.
The move also comes less than three years after Hertz ordered 100,000 Tesla Model 3s and even recruited seven-time Super Bowl champion Tom Brady as its celebrity spokesperson to promote its new focus on electric vehicle rentals.
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