Hertz CEO Stephen Scherr is stepping down from his role this month after his gamble on electric vehicles (EVs) may have cost the company its biggest quarterly loss since 2020.
Until recently the car rental giant was all-in on electric vehicles and unveiled an ambitious strategy to convert 25% of its fleet to EVs by the end of the year. The company was recognized by the Biden administration for its “efforts to expand access to electric vehicles across the country.” Hertz promised to “electrify” customers’ travels, claiming that demand for EV rentals was “growing.”
But EVs have proven to be more difficult to maintain than originally thought. In January the company announced it would be reversing strategy and will be selling its 20,000 EVs — including Teslas — at heavily discounted prices and replacing them with internal combustion engine (ICE) vehicles.
“Expenses related to collision and damage, primarily associated with EVs, remained high in the quarter,” Hertz said in a regulatory filing.
Scherr told investors EVs are an “operational distraction” and have caused Hertz a $348 million loss. He will be replaced on April 1st by Gil West, former COO at Delta Airlines.
Market demand for EVs has been plummeting amid reports that EVs are 80% less reliable than their gas-powered counterparts, leading carmakers to abandon their EV plans.
Mercedes-Benz recently reversed an ambitious pledge to sell only electric cars by 2030. According to new projections, EVs are expected to comprise up to 50% of the company’s total sales in the next decade.
“The company plans to be in a position to cater to different customer needs, whether it’s an all-electric drivetrain or an electrified combustion engine, until well into the 2030s,” Mercedes said in an earnings statement.
Last month Apple ditched Project Titan, a multi-billion dollar, decade-long effort to enter the EV market. The corporation had plans to manufacture EV batteries and build fully autonomous electric cars, but lower-than-expected market demand and Tesla’s market dominance have the tech giant abandoning its vision. Approximately 2,000 employees will either be transferred to Apple’s AI department or will be laid off in the coming weeks.
Aston Martin is also putting its EV project on hold. The luxury automaker announced last month that the release of its battery-operated “supercar” will be delayed until 2026 due in part to failing demand.
“Demand, certainly at an Aston Martin price point, is not what we thought it was going to be two years ago,” Aston Martin Executive Chairman Lawrence Stroll said.
In December Ford cut production of its flagship EV by 50%, also citing low demand. The auto giant instructed its assembly plant in Dearborn, Michigan to halve its monthly quota for the all-electric F-150 Lightning pickup truck from 3,200 units to 1,600 units per month.
Nevertheless, the Biden administration is forging ahead with its plan to phase out gas cars and force automakers to sell EVs. The Environmental Protection Agency (EPA) is expected to finalize regulations this week that place punishing emissions standards on cars which will essentially ban many internal combustion vehicles. Based on the regulations it is expected that two out of every three cars sold by 2032 will be electric.
The regulations also come despite desperate pleas by car sellers across the country to relax the restrictions on gas vehicles. In a November letter to Joe Biden, more than 4,000 car dealerships cited the lack of consumer demand for EVs, which on average are twice as expensive as the average subcompact car.
Some critics of the EPA’s rules also note that EVs are not the environmental solution they are portrayed to be.
Volkswagen announced in July that its e-Golf would need to be driven for 77,000 miles to surpass the environmental effect of its fuel-powered rivals. The figure overshoots Volvo’s own 2021 prediction that EVs only achieve environmental benefits after covering a distance of 30,000 to 68,400 miles, which generally takes four to nine years.
Based on Volvo’s data, EVs are found to be 70% more environmentally detrimental compared to ICE cars, primarily due to the impact of their batteries. EV batteries require heavy cobalt and lithium mining, which is undertaken in Africa and South America and creates large greenhouse gas emissions.