That clever quote from the movie Forrest Gump applies in spades to Hertz’s 2021 decision to equip its rental fleet with 20,000 EVs. Given decisions like this, it’s not surprising that Hertz was once forced to declare bankruptcy. What is surprising is that the new management team doesn’t appear any more competent.
This is not Monday Morning Quarterbacking when I say that the EV decision was as stupid as a corporate decision comes. It was undoubtedly made for ESG and/or public relations reasons because it sure wasn’t based on an understanding of the car rental business model.
Two obvious characteristics of EVs were all that needed to be considered to understand why any major move into EVs at this time was foolhardy.
First, driving an EV takes some getting used to. Why would a rental customer (notwithstanding the 10% of renters who own an EV) want to deal with adapting to the nuances of an EV solely to acquire temporary transportation?
Second, EVs require recharging. Thus, rental customers would need to locate chargers near their travel route and subject themselves to the machinations and time required to charging a vehicle. And yes, if a renter wasn’t traveling far, they might not need to recharge. However, I assume that they then would have to pay Hertz the equivalent of a gas charge for returning the vehicle in a less than full condition.
Hertz didn’t just acquire 20,000 EVs – which will now hit the secondary market - it proclaimed 25% of its fleet of approximately 425,000 vehicles would be electric by 2025. For those keeping score - that would be next year.
The company attempted to mask this flawed decision by citing in its SEC filing that “expenses related to collision and damage” related to EVs” were factors. That CYA statement just makes management look more inept. Didn’t they look at these predictable costs prior to making the decision?
Why highlight this failed effort? Because there are opportunity costs associated with poorly thought-out decisions such as this. And at the end of the day, attempting to garner some ESG and/or public relations points resulted in a black eye for Hertz. But that’s the company’s problem. The larger issue is high-profile mistakes like this give a black eye to the overall decarbonization effort because it provides the opposition with ammunition to boost its opposition.
Hertz would have been far wiser to take the money that it invested in EVs and invest it in hybrids. That might not have garnered as much attention, but it would have had a real and immediate impact on emissions while being consistent with their customer’s needs.
#hertz #evs #electricvehicles