Failed electric car venture claims Hertz CEO

The global head of Hertz has stepped down amid huge losses for the rental car giant, which has recently hit the brakes on its plans to expand its electric vehicle (EV) offerings amid rising costs.

Stephen Scherr announced he would vacate his role as Hertz CEO and leave the rental car company’s board on April 1, with Gil West – former chief operating officer of General Motors’ autonomous taxi firm Cruise – set to take over.

Mr Scherr took the role as Hertz CEO in February 2022, almost two years after the company filed for bankruptcy in the US and Canada in the first months of the global pandemic. 

The executive soon sought to deliver on the rental car firm’s plans to bolster its US fleet with at least 25 per cent EVs by 2025, which had been set in motion in late 2021 when Hertz made an order for 100,000 Tesla EVs in the US.

This order was made at the list price of the cars, not at a discounted rate, as is common between rental companies and carmakers.

Under Mr Scherr’s leadership, Hertz signed a deal reportedly worth US$3 billion (A$4.62bn) with Chinese-owned carmaker Polestar for 65,000 of its EVs by 2027 for the firm’s US fleet.

However, rising repair costs for EVs compared to traditional petrol and diesel cars soon began to impact the company, while flagging demand for battery-powered vehicles in the wider market affected resale values.

Hertz announced it would sell 20,000 EVs from its US fleet due to rising depreciation and repair costs in January 2024, and later asked Polestar to waive its EV supply contract last month – a request which the carmaker agreed to on the condition that the rental car company wouldn’t offload its EVs at a significantly lower price or too soon.

The nixing of the Polestar deal followed reports late last year that Hertz had received just 35,000 of the 100,000 Teslas it had initially ordered two years prior.

Previous reports have pointed to Hertz being vulnerable to market conditions as it purchases the cars on its fleet outright, rather than the more traditional practice of having an option to sell its vehicles back to manufacturers for a set price.

Over the past year, Hertz share prices have dropped from US$19.36 to US$7.49 on the NASDAQ.

SOURCE

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