Tesla’s price impacts Q3 earnings of Hertz

Hertz, a rental company that began using Tesla automobiles in 2021, faced difficulties as a result of the electric automaker’s price reductions during the third quarter. Hertz’s Q3 earnings report was hampered by price fluctuations because profit projections were not met.

As it learns to control expenses, Hertz will reduce the number of electric vehicles it adopts, CEO Stephen Scherr stated on Thursday, as reported by Bloomberg.

A significant partnership and a general change in the rental industry’s landscape in the United States were initiated in 2021 with the signing of a massive deal between Tesla and Hertz for 100,000 vehicles.


Roughly 35,000 Teslas make up Hertz’s fleet of EVs, which has grown to 50,000 overall, or 11% of all vehicles. Conversely, Tesla has been lowering costs in an effort to make its vehicles more accessible to consumers, trying to get some models as close to or even cheaper than $30,000 after state and federal subsidies.

While consumers of automobiles are thrilled with the deals, stockholders and businesses like Hertz that rely on sustaining strong margins and profitability are not. Their Tesla fleet’s resale value has dropped by roughly thirty percent, and Hertz’s initial estimate of EV maintenance costs was understated.

Hertz will continue to purchase 100,000 Teslas and 175,000 GM EVs, but it will fall short of its target of having 25% of its rental fleet comprise EVs by the end of the following year. In order to reduce its purchase costs, it must wait for costs to settle and reduce repair costs by collaborating with suppliers.

“We currently have the chance to purchase these cars for about a third less than the original cost of the parts that make up our Tesla cars. In the end, we’re better buyers when the price drops and the margin composition of those cars improves”, added Scherr.

Hertz experienced financial strain in Q3 for reasons other than just the price reductions for electric vehicles. A year ago, the price of used cars was significantly higher, and Hertz could sell its cars for more money than it could have purchased them new.