Hertz (HTZ) stock initially dropped after reporting a wider-than-expected Q4 loss due to challenges with its EV fleet, notably the sale of 20,000 Teslas.
Hertz cited high depreciation costs and increased repair expenses for EVs as key contributors to the losses.
The company is considering further reductions to its EV fleet and has paused future purchases of Polestar EVs.
Despite this, Hertz remains committed to EVs but plans to be more cautious in managing supply and demand.
CEO Stephen Scherr emphasized the need for better EV inventory control and cost-cutting.
Scherr, said, “We continue to experience elevated collision and damage in the quarter, largely driven by costs associated with running our EV fleet, and perhaps more significantly, the challenge of the EVs had an impact on our operational efficiency more generally, further supporting the advisability of our EV sales plan.”
“I think the lesson of this, if you will, is that incremental steps to wrestle down the cost elements of the EVs were not going to work,” he continued.
“And as a consequence and as evident in the fourth quarter, the need to take a big bite out of this issue was one that was in front of us and we took it. And if that’s not enough, we’ll do more,” explained the CEO.
“We will also be positioned to better meet customer demand through higher utilization on fewer and less expensive ICE vehicles while maintaining an EV fleet where, again, supply better meets profitable demand,” added Scherr.
The company aims to redeploy EVs strategically while focusing on higher utilization of internal combustion engine vehicles.
Hertz’s decisions regarding its EV fleet will be crucial for both the company and Tesla, particularly as Tesla seeks to achieve its targeted growth rate for vehicle deliveries.
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