Hertz rental car is selling off 30% of its electric vehicle fleet, according to a Securities and Exchange Commission filing.

The 20,000 vehicles will be sold from its U.S. fleet over the course of 2024 and represent multiple makes and models, according to Thursday’s filing.

What You Need To Know

  • Hertz rental car plans to sell 20,000 EVs, according to a Securities and Exchange Commission filing

  • The EVs will be sold from the U.S. fleet

  • In 2021, Hertz said it would purchase 100,000 Tesla Model 3s

  • Some of the proceeds from the EV sales will be reinvested in gas-powered vehicles

“We took a bold move and are making a strategic adjustment to our fleet,” Hertz CEO Stephen Scherr told CNBC Thursday morning. “It’s really to respond to the reality, which is we’re trying to bring supply in line with demand, and we’re addressing a cost issue that happens to be related to the EVs in the context of damage and damage costs.”

The news comes just a couple years after Hertz announced it would buy 100,000 Tesla Model 3s in late 2021, making it the biggest single order for electric vehicles ever. Many of those models are now being sold through the Hertz website for as little as $18,000 — or $14,000, after applying the $4,000 federal tax credit for used EVs.

Scherr said Hertz’s decision was based on EVs’ operational performance and higher rates of depreciation compared with gas-powered vehicles.

“It’s not about the broader issue of EVs for the company,” he added, saying Hertz still believes electric vehicles will be a major force in the long run.

The company’s purchasing was just ahead of the adoption curve, he said.

When Hertz began buying EVs, the thinking was that customers would rent them to test before buying. Scherr told CNBC that “did happen and it is happening," but "it’s just not happening at a level of demand that justifies us maintaining a fleet of this size at this moment in time.”

EVs accounted for almost 7% of new car sales in 2023, according to Cox Automotive — a percentage that’s expected to grow to 10% this year and 15% in 2025.

But in the meantime, prices have declined. Tesla’s price cuts last year negatively affected residual values for used EVs, Scherr said.

According to the SEC filing, Hertz plans to reinvest a portion of the proceeds from its used EV sales to buy more in-demand internal combustion vehicles.

Despite the decrease in EVs for rent, Hertz will continue to invest in EV charging infrastructure and “growing relationships with EV manufacturers, particularly related to more affordable access to parts and labor,” according to the SEC filing.

Repairs for EVs cost 29% more than for internal combustion vehicles, according to 2023 analysis from Solera Holdings, with EV parts costing about 48% more.