Rental car giant Hertz Global Holdings announced it will sell approximately 20,000 electric vehicles (EVs), about one-third of its global EV fleet. The sales, which began in December 2023, are expected to continue steadily through 2024.
Hertz plans to reinvest a portion of the EV sale revenue into new internal combustion engine (ICE) vehicles to meet customer demand.
In a strategic shift to balance EV supply and demand, Hertz hopes to eliminate lower margin EV rentals and reduce expenses tied to EV damage claims. The company will continue pursuing its EV mobility strategy and offer customers a wide selection of makes and models.
The EV sell-off triggered a $245 million non-cash charge in Q4 2023 to align the vehicles’ book value with expected sale prices, minus related sell-off costs. This write-down is incremental to normal fleet depreciation already on the books. Future depreciation of EVs held for sale should be limited barring condition changes.
Hertz expects the move to boost 2024 and 2025 Adjusted Corporate EBITDA as higher margin ICE vehicles replace outgoing EVs. By end of 2025, the 2-year benefit should offset the Q4 accounting charge. Additionally, the company forecasts $250-$300 million in incremental free cash flow over the phase-out period.
Investors eager for more color should tune into Hertz’s upcoming Q4 2022 earnings call on February 6, 2024.