ESTERO, Fla. (TND) — Car rental service Hertz will switch one-third of its car fleet to gas-powered vehicles, according to a regulatory filing Thursday.
Citing low demand, maximum fixed costs, and immediate depreciation, Hertz announced it would sell 20,000 electric cars by 2024 and upgrade them with gas-powered cars. The company expects to make a loss of $245 million from the sale of the depreciated cars.
However, between 2024 and 2025, the company expects that acquiring more gasoline-powered vehicles could increase its profits by up to $300 million. Currently, Hertz’s used car includes some Tesla models that sell for as little as $21,000.
In an interview with CNBC, Stephen Scherr, Hertz’s chief executive, explained that the company sees the move as a positive.
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“We have taken an ambitious resolution and are making a strategic adjustment to our fleet to eliminate 20,000 electric cars,” he said. “At the beginning of this year, when Tesla lowered the value of its cars, the residual value is going down, the depreciation is going up, which obviously represents a charge for the company. We have to face this reality.
Sen. John Barrasso, R-Wyo. , cited the news as a failure of President Joe Biden’s Inflation Reduction Act at a Senate hearing.
“So much for Biden’s economy,” Sen. Barrasso joked, in an excerpt of Hertz’s decision.
The news is another Tesla flaw as the company continues to face challenges. In December, the company recalled more than 2 million cars to fix a faulty Autopilot formula that’s helping drivers focus.
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“If the driver attempts to turn on the Autosteer when conditions for activation are not met, the feature will warn the driver that it is unavailable via visual and audible alerts, and the Autosteer will not activate,” the recall says. Status of documents.