‘Crazy cheap’ Teslas hit the market as Hertz fire sale intensifies after error buying 100,000 EVs
Hertz’s decision to buy 100,000 Teslas has backfired badly – but it does mean cheap EVs are up for grabs.
The car rental giant began to sell off its stock of Teslas a year ago – due to a lack of demand from customers who prefer gas models. Bosses also said they wanted to offload the cars due to high repair costs.
With slow demand, Hertz is being forced to sell the electric vehicles at steep discounts.
In the past week, a Hertz customer shared a jaw-dropping deal on Reddit: a 2023 Tesla Model 3 for just $17,913 – less than half its retail price of $38,990.
In January the company said that the proceeds from the sales would go to funding more gas powered cars.
It is a departure from its previous target that 25 percent of its overall fleet would be electric by the end of 2024.
In 2022, it said it would buy up to 65,000 EVs over five years from Polestar. That was just months after it ordered 100,000 cars from Tesla.
The selling of the EV fleet aligns with a broader trend in the US auto market in which demand for electric cars appears to have fallen.
The cut prices comes after a rocky financial year for Hertz who reported a wider-than-expected third-quarter loss and missed revenue estimates last month.
The company has started to scale back the amount of the vehicles they have in their stock, citing higher repair costs
In the last week, a Hertz customer shared to Reddit with a deal they received to purchase a 2023 Model 3 Tesla, for $17,913 – less than half its retail price of $38,990
The company recorded a $1 billion asset impairment charge during the quarter, citing a decline in fleet values, and an overall decline in car prices as consumers delay purchases in the current economy.
In its latest report, market research firm Cox Automotive said that affordability remains a challenge for consumers, with fewer models for sale in the $15,000 price bracket, which is more popular among used car buyers.
Hertz’s depreciation per unit surged 89 percent to $537 million in the quarter ended Sept. 30 from a year earlier.
On an adjusted basis, the company lost 68 cents per share compared with analysts’ average estimate of a loss of 50 cents, according to data compiled by LSEG.
In April, the company reported $392 million in losses for the first quarter with former CEO Stephen Scherr telling investors they ‘continued to face headwinds related to our electric vehicle fleet’.
Scherr said that the company’s strategy going forward was to plan a reduction in EV’s, and to sell 30,000 of them by the end of the year.
Hertz brought superstar footballer Tom Brady, seen here, as part of their ad campaign to promote the EV’s in their fleet
It was a sharp u-turn on their 2021 plans to buy 100,000 of the cars, even enlisting the help of Tom Brady to promote the venture.
In a filing to the Securities and Exchange Commission (SEC) earlier this year, Hertz noted that the decision to sell the cars would likely cost around $245 million due to differences between their value at the end of 2023 and the prices for which they eventually sell.
Depreciation of its electric vehicle fleet in recent years is another phenomenon Hertz has previously alluded to.
Many of the Teslas it purchased were leased to Uber as part of a scheme that enabled drivers to rent them for the job, starting at around $330 a week.
Although Teslas are a popular choice among cab drivers, there are various complications when it comes to renting one for a trip, such as limited range and a potential lack of access to charging stations.
A Hertz spokesperson said: ‘Many people don’t know we sell cars. By connecting our rental customers who opt into our emails to our sales channels, we’re not only building awareness of the fact that we sell cars but also offering a unique opportunity to someone who may be in the market for the same car they have on rent.’
