\n
![](\"https:\/\/content.fortune.com\/wp-content\/uploads\/2024\/03\/GettyImages-1247872469-1-e1710615839374.jpg?w=2048\")
<\/p>\n [ad_1]
\n<\/p>\n
It seemed like a good idea at the time. Now we know better.<\/p>\n
Hertz<\/a>, reeling from a bankruptcy and the pandemic, announced plans to buy 100,000 Teslas in late 2021. The splashy move<\/a> certainly helped Elon Musk\u2019s electric-vehicle maker, which saw its market cap surge past $1 trillion for the first time.\u00a0<\/p>\n Hertz enjoyed a bump in its market value as well, and the car-rental giant hired NFL star Tom Brady to show off its new fleet of Teslas.<\/p>\n \u201cHow do we democratize access to electric vehicles? That\u2019s a very important part of our strategy,\u201d interim CEO Mark Fields said at the time. \u201cTesla is the only manufacturer that can produce EVs at scale.\u201d<\/p>\n But Hertz paid close to list prices<\/a> for the Teslas, rather than demanding a large discount as car-rental giants often do. That decision would come back to bite it.<\/p>\n Last year, Musk\u2019s EV maker cut prices across its lineup to boost sales. That not only angered individual customers who\u2019d recently bought a Tesla at a higher price, but it also crushed the resale value of Hertz\u2019s used EVs.\u00a0<\/p>\n This January, the rental giant revealed that it was selling off 20,000 electric vehicles, noting the costly depreciation, weak demand, and pricey repairs. It took a $245 million hit and suffered its steepest quarterly loss since the pandemic.<\/p>\n \u201cThe elevated costs associated with EVs persisted,\u201d Hertz CEO Stephen Scherr said at the time. \u201cEfforts to wrestle it down proved to be more challenging.\u201d<\/p>\n This week, Hertz announced that Scherr would be replaced by<\/a> Gil West, the former COO of General Motors\u2019 Cruise robotaxi unit. While Scherr took over after the Tesla deal, under his leadership Hertz continued its focus on EVs, placing big orders for them with GM and Polestar.<\/p>\n The ill-fated EV push followed a difficult stretch for Hertz that culminated in billionaire activist investor Carl Icahn unloading his substantial stake in the car-rental company in 2020 days after its bankruptcy. In 2014, Icahn had begun acquiring his stake in Hertz, which was struggling. He called Hertz<\/a> \u201ca great brand\u201d that he hoped would \u201creturn to its former glory,\u201d and three of his allies soon had board seats, while the hunt for a new CEO began.<\/p>\n After selling selling his stake, Icahn said, \u201cYesterday I sold my equity position at a significant loss, but this does not mean that I don\u2019t continue to have faith in the future of Hertz.\u201d<\/p>\n The following year, the company announced the decision to buy Teslas. Now it\u2019s about to welcome yet another new CEO, again tasked with turning things around.\u00a0<\/p>\n<\/div>\n\u2018Elevated costs\u2019 of EVs<\/h2>\n
Subscribe to the Eye on AI newsletter to stay abreast of how AI is shaping the future of business. Sign up<\/a> for free.<\/div>\n