Hertz Stock Plunges 19% as It Continues to Lose Money on Ill-Fated Tesla EV Plan

Hertz Global Holdings (HTZ) shares cratered after the rental car giant said it will incur an additional $195 million cost from its unsuccessful effort to switch over to electric vehicles (EVs), leading to a huge first quarter loss.

Hertz reported that it had increased its prior plans to slash its fleet of EVs by an additional 10,000, incurring the new charge for writing down the value of the EVs it planned to sell. In January, the company said it would be selling 20,000 EVs and took a $245 million charge.

The combined moves will reduce Hertz’s EV fleet in half, a large percentage of which is made up of Teslas (TSLA). 

In October 2021, Hertz announced with much fanfare a massive investment in EVs, with plans to buy 100,000 Teslas. It partnered with NFL great Tom Brady to help draw customers, and noted that it was taking the step as “consumer interest in electric vehicles skyrockets.” However, the hoped-for demand never came, and the company became strapped as prices for EVs tumbled, hurting their resale revenue, and repair costs rose.

The $195 million was part of a $588 million increase in vehicle depreciation in the quarter, leading Hertz to post a loss of $1.28 per share, more than double estimates. Revenue rose 1.6% to $2.1 billion, in line with forecasts.

CEO Gil West explained that fleet and operating costs weighed on Hertz’s results, and that the company was working to get to “the right supply of vehicles at an acceptable cost while at the same time driving productivity up and operating costs down.”

Hertz shares fell 19.3% to close at $4.68, after falling as much as much as 25% during Thursday’s session.