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MagyarTesla aftermarket parts and high repair costs slow rental purchases as EV price drop brings losses
When Hertz announced its plans to buy and rent 100,000 electric vehicles from Tesla, its share price jumped significantly on the news, only to drop 10% a year later when Hertz complained about the financial difficulties its EV fleet brought on.
In its last quarterly results press conference, Hertz's CEO Stephen Scherr complained that "on a unit basis, we achieved productivity gains across most categories of auto," but an "an exception remained vehicle damage costs, particularly those on our EVs," in a slight jab at Tesla whose cars represent nearly 80% of Hertz's EV portfolio now.
As many a Tesla owners could attest, waiting on OEM parts for simple fender benders could take a long time, while insurance companies often make it easier to write off an electric car now than deal with repair costs. Tesla maintenance expenses and repair wait times aside, Hertz also had to swallow the price war that Elon Musk started in the beginning of the year, too.
As Tesla electric car prices dropped a third from their peak, Hertz had to write off a significant number as a loss given the high price tag it bought its Teslas at. "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," informed the CEO of Hertz.
Still, the rental giant is not giving up on EVs and Mr. Scherr added that Hertz's "focus and our work with Tesla is to look at the performance of the car so as to lower the risk of incidents of damage," so that the company can be "in very direct engagement with them on parts procurement and labor and the like" in order to speed up damage repair and lower its costs.
"Remember, in the likes of GM and other OEMs, there’s decades of establishment of a broad national parts supply network. There’s an aftermarket of parts that that is there that is less mature obviously in the context of Tesla," he added, while saying that Hertz remains committed to buying 100,000 cars from Tesla, just in a longer timeframe than originally envisaged.
