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Hertz will shrink its electric fleet following change to Tesla's pricing strategy: 'Those two have not converged as quickly as ... we thought'

"Tesla is new to the [car rental] game."

“Tesla is new to the [car rental] game."

Photo Credit: iStock

Hertz is downsizing its fleet of electric vehicles by the thousands after an "unprecedented" decision by Tesla threw a wrench in the auto rental company's plans to move toward the more eco-friendly vehicles, as reported by The New York Times' Jack Ewing.

What's happening?

When Tesla slashed prices by roughly 30% in 2023, per the Times, many individuals rejoiced. However, the move had the unintended side effect of making it unprofitable for Hertz to carry the vehicles, as the value of the used EVs also dropped.   

"Tesla is among the best-selling cars in America, but it's not yet the best rental car. Those two have not converged as quickly as many people, including ourselves, thought," Hertz chief executive Stephen Scherr told the outlet, adding that the automaker was unusually hesitant to offer bulk discounts on replacement parts. 

"Tesla is new to the [car rental] game," he said.

While Hertz isn't planning to pivot away from EVs entirely, it intends to purchase 20,000 gas-powered vehicles to replace a third of its fleet and wait for the market to develop before ramping up its adoption of the vehicles. 

This isn't the first time Tesla has come under scrutiny for apparent misfires on policymaking, with unusual price hikes, allegations of misleading information, and concerns about fair wages among the complaints. 

Why is this concerning?

It is unclear what will happen with the soon-to-be-discarded Hertz vehicles, making this a potentially wasteful misstep, and car manufacturing is an energy-intensive process regardless of the type of vehicle. 

While the production of EVs creates more pollution in the short term, the environmental, health, and monetary benefits of driving them far outweigh that initial cost, so the reintroduction of more gas-powered cars to the fleet is a significant step back.

As detailed by Yale Climate Connections, most of the planet-warming pollution generated by vehicles occurs when they are on the road, but EVs don't emit any heat-trapping gases when driven because they don't run on dirty energy

This results in a 52% reduction in asthma-causing pollution over the lifetimes of EVs, according to the Union of Concerned Scientists.  

What can be done to help?

Jeremy Robb — the senior director of economic and industry insights at Cox Automotive — told the Times that he was concerned about how Hertz's decision will "fuel the narrative on the negative side for EVs," even though the market for the vehicles remains promising. 

Cutting through the noise doesn't have to be difficult, though. Initiating conversations about climate issues with your inner circle is an amazing way to get involved, as is supporting brands that are investing in eco-friendly initiatives. 

For its part, Hertz told the Times it is still planning to carry some EVs, so opting for one instead of a traditional car when possible is another way to support the adoption of the vehicles as rentals.

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