Herz, a rental company that once had high hopes for its Electric Vehicle fleet, is now facing challenges as Tesla‘s resale value drops and repair costs increase. The company had initially planned to electrify a significant portion of its fleet, with a goal of ordering 100,000 Teslas by the end of 2022. However, as of now, Herz only has 35,000 Teslas in its fleet, falling far short of its initial target.
The CEO of Herz, Steven Sher, acknowledged that Electric Vehicle repair costs were higher than anticipated and that Tesla‘s price cuts had reduced the resale value of the majority of electric cars in its fleet by about one third. As a result, Herz is now pumping the brakes on its plans to electrify more of its rental car fleet.
In an effort to mitigate the problem, Herz has decided to diversify its Electric Vehicle fleet by purchasing more electric vehicles from General Motors and other automakers. Sher believes that these vehicles will have a lower incidence of damage and lower repair costs compared to Teslas. However, Herz’s decision to slow down its electrification plans has resulted in lower margins and decreased revenue per day for its electric vehicles.
The challenges faced by Herz highlight the complexities of maintaining and repairing electric vehicles. While electric cars are often touted as requiring less maintenance than their gasoline-powered counterparts, they can still face unique maintenance needs due to their weight and high torque. Electric Vehicle owners may need to replace tires more frequently and address issues with suspension, brakes, and steering systems.
Despite these challenges, Herz remains committed to its goal of ordering 100,000 Teslas and 175,000 electric vehicles from General Motors. The company is hopeful that diversifying its Electric Vehicle fleet will improve margins and address the issues it has faced with Tesla vehicles.
As the Electric Vehicle market continues to evolve, rental companies like Herz will need to adapt to changing dynamics and find ways to effectively manage their Electric Vehicle fleets. By learning from their experiences with Tesla and exploring new opportunities with other automakers, Herz can position itself for success in the rapidly growing Electric Vehicle industry.
