Hey everybody, welcome back to the Elon Musk Podcast. This is a show where we discuss the critical Crossroads, the Shape, SpaceX, Tesla X, The Boring Company, and Neuralink. And I'm your host Will Walden Hertz Rental Cars or Hertz Global Holdings announced that it's planned to sell approximately 20,000 electric vehicles from its rental fleets.
This is attributed to the escalating costs associated with collision and damage of these vehicles, leaving the company to favor less expensive to fix gas powered alternatives. Now this announcement impacted the stock market with Hertz shares dropping around 4%. Tesla, a significant part of Hertz's EV fleet also saw its shares declined by about 3% at that time. The financial impact on Hertz is
pretty substantial. The company anticipates a charge of roughly $245,000,000 in the fourth quarter of last year related to the deprecation expenses from the sale of these EVs and Hertz move highlights the challenging situation for EVs in the current market. Growth in EV sales has decelerated a little bit, prompting manufacturers like GM and Ford to reconsider their production strategies going
forward. Now Adam Jonas and analysts and Morgan Stanley interprets Hertz decision as a cautionary sign for the burgeoning EV sector. Right now, he suggests a need to recalibrate market expectations for electric vehicles and also for rental fleets. Now Jonas points out that despite the appealing driving experience and fuel efficiency of EVs, ownership entails additional, often overlooked
costs. Now, Hertz previous commitments to electric vehicles included an order of 100,000 Tesla cars by the end of 2022 and a subsequent agreement to purchase up to 65,000 vehicles from Polestar over five years. And Hertz cited elevated expensive linked to EV collisions and damages as a primary reason for this decision, as mentioned in the regulatory filing.
Meanwhile, German car rental company 6th SIXT has also moved away from Tesla. They stopped purchasing Tesla vehicles since 2022 and are now selling off their Tesla fleet as part of the regular vehicle rotation and despite divesting from Tesla 6th remains committed to electrifying its fleet, aiming to convert 70 to 90% of its European rental fleet to electric by 2030. Now Hertz, while reducing its EV inventory plans to continue enhancing the profitability in
its remaining electric fleet. Now market trends indicate a decline in used EV prices through most of 2023. This trend is expected to persist with used E VS projected to deprecate more than overall used vehicle market in 2024 according to Cox Automotive. Fun fact, I used to work for Cox Automotive for about two years and I love the experience there. Great company to work for great people.
Carl Brewer, the IC Cars spokesman, notes that while 20,000 vehicles represent a small fraction of the used vehicle market, Hertz's sales will contribute to the ongoing trend of depreciating used EV values, resulting in significant losses for the company. Hertz is offering some of his Model 3 vehicles at nearly half their original purchase price with listings as low as $20,000. So get on it. If you're looking for an EV, More than likely you can get a Tesla for much cheaper than retail.
Now this move comes as the company aimed for 25% of its fleet to be electrified by the end of 2024 / 700 E VS, including models from BMW, Chevy, and Tesla are listed for sale on Hertz's used auto website. These sales provide an opportunity for consumers to acquire affordable electric vehicles like model threes and recurrent auto Suggest that Hertz test the model threes might qualify for a used EV tax rebate too, so you can save
potentially more money now. This situation presents an attractive option for you if you're seeking affordable EVs despite concerns over the reliability and high mileage that other rental cars would have too. I know people who have bought edit this out personally. I know people that have bought their vehicles from rental agencies and they turned out to be OK.
Nothing really wrong with them. It's kind of like buying a car from a regular person, but just a bunch of different people doing different sort of driving than say what I was told when I bought my Subaru, my last Subaru, that it was used by a grandma going from her house to the grocery store. So which I don't think that's actually true, but you know what? Burlington Subaru you got me. But that was a great car, 200,000 miles at that one.
So they got me on that one. I'm not sure the models or the makes of the model threes or the actual serial numbers, but I'm sure they're in pretty good condition. So to go check them out, see if they're good for you. Now, comparisons with other marketplaces, though, like CarMax and Autotrader, show that Hertz's offerings are competitively priced. Consumer Reports rates the Model 3's reliability as average, supporting the notion that Hertz's Tesla vehicles are pretty good values.
Now, Hertz's decision to sell a substantial portion of its EV fleet shows a big shift in its business strategy, reflecting the current challenges and economic realities of the EV market. This move offers customers an opportunity to purchase EVs at lower prices with considerations regarding their condition and reliability. It might be right for you, so go check it out. Hey, thank you so much for listening today. I really do appreciate your support.
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