Why Rental Car Companies Are Ditching Electric Vehicles for Gas Cars

Rental-car company is the latest to be hit by weak demand for electric cars. Hertz Global Holdings Inc. said Thursday it is selling about 20,000 electric vehicles from its fleet, or about one-third of the total, in the latest sign that the EV revolution is stalling amid weak demand from consumers.

The move is aimed at better balancing supply and expected demand for EVs, allowing the car-rental company to scrap a disproportionate number of lower-margin rentals and reduce damage expenses associated with EVs.

Collision and damage costs for EVs remained high in the fourth quarter, Hertz said in a regulatory filing. That’s because EVs require special tools and parts and specialist knowledge to repair after a crash, more so than traditional gas-powered vehicles.

The charge is on top of the depreciation costs the company expects to record in the quarter in the ordinary course of managing its fleet.

Hertz will continue to offer EVs but will implement measures to boost profitability, including by expanding infrastructure such as charging stations and expanding relationships with EV makers, particularly as it relates to more affordable access to parts and labor, the company said.

Hertz will reinvest in additional internal-combustion-engine vehicles and expects to improve profits or earnings before interest, taxes, depreciation and amortization, across 2024, as vehicles are rotated.