All Hertz’s electric slaloms to get back on track
Hertz, still bruised by the pandemic, is trying to sell the electric ones it had purchased perhaps with excessive enthusiasm to… buy back the thermal ones it was replacing
It was October 2021, Hertz had just narrowly avoided bankruptcy and, to relaunch its image in the period immediately following the pandemic (which, for obvious reasons, had hit those who work in the car rental sector hard), its CEO Stephen Scherr announced the electric turning point through the purchase of 100 thousand Teslas, boosting Elon Musk 's electric car company on the stock market.
THE MAXI AGREEMENT WITH TESLA (WHICH ONLY BENEFITED MUSK)
The agreement between the two giants was in fact around 4 billion dollars, representing the largest order in the world of new low-impact engines. But there is more, because browsing through the press releases of the time also brings to light the fact that Hertz had also announced a strengthening of the infrastructure for charging cars, with the creation of three thousand points between the United States and Europe, to cover 65 markets by December 2022 and over one hundred by the end of 2023.
HERTZ CAR ENGINE COUGHING
We have reached the end of 2023, i.e. the date indicated in the documents presented to its shareholders – indeed, we have exceeded it for several weeks – and Hertz is forced to notify the Securities and Exchange Commission (the US federal body responsible for supervising the stock exchanges , from here on Sec) that its industrial strategy has radically changed. What's more: he's really taking it back.
THE NEW REVERSE: OUT OF BEV, INTO ENDothermic
The multinational – we read in the formal notice delivered to the SEC – “has taken the strategic decision to sell approximately 20,000 electric vehicles from its US fleet, or approximately a third of the global fleet. The divestitures, which began in December 2023 and are expected to take place in an orderly manner during 2024, will cover various brands and models."
But the surprising thing is the following: “The company plans to reinvest a portion of the proceeds from the sale of electric vehicles into the purchase of vehicles with internal combustion engines to meet customer demand.” In its fourth quarter results, Hertz will record a charge of approximately $245 million related to amortization expenses. This last indicator will also be affected by a further increase in depreciation caused by the drop in the residual values of the same vehicles put up for sale. Last year the stock fell 32 percent.
HERTZ HAS THE LONG – COVID?
In short, a real escape from the electric car for the American car rental champion, who reneges on his ambitious industrial plan in the space of just two years in an attempt to stay afloat, given that the company never seems to have really recovered from the pandemic.
We remember that, in the midst of a health emergency, that is, at the end of April 2020, Hertz (controlled by the billionaire financier Carl Icahn , the largest shareholder with a 39 percent stake) had to admit that it was not able to pay the leasing installments expiring for its fleet of vehicles. She was thus granted by her creditors an initial extension of the deadline to May 4th, then postponed to May 22nd. Thanks to the deferral, he managed to narrowly avoid having to declare bankruptcy, deposit his books in court and resort to Chapter 11 procedures. It remains to be seen whether Hertz has now left such a danger behind once and for all.
The story also represents a wake-up call that will have to be heard by those around the world who were pushing for the mass adoption of the new engines. At present, Hertz demonstrates how the costs of the cars but above all of their maintenance make the new technology uneconomical compared to traditional endothermics, especially if embraced with excessive enthusiasm. Will this really be a warning to anyone?
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/smartcity/hertz/ on Fri, 12 Jan 2024 15:07:02 +0000.