SIXT ditches Tesla cars for BYD in its electrification push citing abysmal depreciation and repair costs
At the peak of the EV craze, rental car giants ordered hundreds of thousands of Teslas and other electric vehicles to hit their sustainable transportation and emission quotas. Apparently not everything is going according to plan, as, after Hertz, now SIXT will change its electrification strategy.
In the case of Tesla, slow down means completely abandon purchases from Elon Musk's automaker. SIXT wants nothing to do with Teslas from now on, as their residual value turned out to be abysmal compared to what SIXT bought them for, not to mention the troublesome maintenance. Existing Tesla vehicles already purchased will remain in SIXT's rental fleet until written off, but no new Teslas will be acquired.
Somewhat surprisingly, however, SIXT seemingly remains committed to EV purchases from Tesla's biggest competitor BYD. The rental giant confirmed that it plans to fulfil its strategy for 90% fleet electrification by 2030, just, apparently, with the 100,000 electric cars it ordered from BYD, instead of Tesla.
The EV batch that SIXT ordered from BYD rivals the much touted Tesla deal with Hertz for 100,000 Model 3 vehicles that at the time was worth more than $4 billion. Hertz, however, cited absolutely the same poor depreciation and repair rates arguments when it recently said it will slow down Tesla car purchases.
"MSRP declines in EVs over the course of 2023, driven primarily by Tesla, have driven the fair market value of our EVs lower as compared to last year, such that as salvage creates a larger loss and therefore greater burden," tipped Hertz's CEO at the time, adding also that for traditional vehicles "there’s an aftermarket of parts that is there which is less mature obviously in the context of Tesla."
Both Hertz and SIXT can't be blamed, since Elon Musk cut Tesla car prices by more than 30% from their peak this year, and the peak is exactly when the rental juggernauts bought their Teslas. Adding the fast depreciation rate of rental cars to the price cuts, as well as the higher insurance premiums and the wait times for repairs means that the Tesla rental undertaking must be quite deep in the red for SIXT and Hertz alike, forcing their hand with such drastic measures.
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