The American car rental company Hertz has reported significant losses in the past quarter, primarily due to a failed investment in electric vehicles.
The net loss exceeded $1.3 billion, compared to a profit of $629 million in the same period last year. This loss was considerably larger than analysts had anticipated.
Hertz wrote off $1 billion in its fleet, largely due to a sharp decline in the residual value of electric vehicles. The company was forced to sell tens of thousands of these vehicles at a loss.
The switch to electric vehicles already put Hertz in trouble in the second half of last year, when electric car prices plummeted and their value on the used market was disappointing. In addition, maintenance costs were higher than expected and rental rates for these vehicles were lower than for traditional cars. For car rental companies, the residual value of vehicles at the end of the rental period is a significant financial risk. Hertz’s revenue fell 5 percent to $2.6 billion in the most recent quarter.
German car rental company Sixt also announced earlier this year that it would be renting out fewer electric cars. According to the company, the reason is that customers prefer a car with a combustion engine. “We adjust our share of electrically powered cars based on consumer demand and can respond very quickly to changes in demand,” Europe’s largest car rental company said in August.
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Read More: Hertz Replaces 20,000 EVs With Petrol Powered Cars