Hertz has decided to dump a third of its electric cars, totalling around 20,000 vehicles, and buy more petrol-powered motors instead.
The rental giant has been bleeding money from its electric fleet, bosses have admitted, because they cost a fortune to fix and lose value fast.
Hertz CEO Stephen Scherr moaned in a recent call with analysts that collision and damage repairs on an EV can often run about twice that associated with a comparable combustion engine vehicle.
And EV price drops in the new car market have slashed the resale value of Hertz's used EV rental cars.
"The MSRP declines in EVs over the course of 2023, driven primarily by Tesla, have driven the fair market value of our EVs lower as compared to last year, such that a salvage creates a larger loss and a greater burden," Scherr whined.
In plain English, people are generally willing to pay less for a used car than for a new one. As the price of new car goes down, that pushes down what people are willing to pay to buy a used one.
Hertz expects to take a hit of about $245 million due to depreciation on the EVs, an average of about $12,250, per vehicle the company said in a legal filing.
While Hertz isn't pointing the finger, it seems that Tesla is mostly to blame.
Tesla makes up about 80 per cent of Hertz's EV fleet, and, altogether, EVs make up about 11 per cent of Hertz's total rental fleet.
Tesla has been slashing its vehicle prices like crazy, forcing other car makers to do the same for their electric vehicles. When car makers cut the prices of new vehicles, that pushes down the value of those models in the used car market, causing rapid depreciation.
For rental car companies like Hertz, which sell heaps of vehicles in the used car market, depreciation has a big impact on their business, and is a major factor when deciding which cars to have in their fleets.
Being a relatively new company, Tesla doesn't have as many spare parts and trained repair technicians that other car companies have, Hertz bosses have said, making it pricey and time-consuming to get repairs.
Besides costing more to repair when they're smashed in a crash, Scherr also said, EVs are also getting in more crashes. Again, Teslas, which make up 80 per cent of Hertz's EV rental fleet, are mostly the problem in both these areas, he said.
"Our work with Tesla is to look at the performance of the car, so as to lower the risk of incidence of damage," he said, "and we're in very direct engagement with them on parts procurement and labor and the like."
Hertz flogs its used vehicles at auctions as well as directly to customers on its Hertz Car Sales website.