CEO of Hertz steps down due to substantial financial losses related to Tesla vehicles
In the realm of the evolving automotive industry, Hertz, the rental car giant, has been navigating turbulent waters. The company's electric vehicle (EV) strategy, initiated before the current CEO, Stephen Scherr, took the helm, has faced several hurdles, including depreciating vehicle values amid competitive pricing from Tesla, escalated maintenance costs, and unexpected maintenance expenses.
These challenges have taken a toll on Hertz's financial health, leading to the need for a change in leadership. Scherr, who ordered approximately 175,000 EVs from General Motors and 65,000 from Polestar as part of his strategies, has stepped down from his post, with no particular reason cited.
Stepping into Scherr's shoes is Gil West, a seasoned executive with a diverse background. West, formerly of Cruise, the robotaxi company, and Delta Airlines, brings a wealth of experience in operational turnarounds. His appointment as CEO, effective from 1 April 2024, is a strategic move aimed at improving Hertz's financial stability and survival.
West's primary focus will be on making Hertz's EV initiatives profitable, a departure from Scherr's EV-heavy approach. Recognising the financial burden of the large Tesla EV fleet, West is poised to advance the execution of Scherr's strategies, with a focus on selling much of the Tesla fleet in favour of internal combustion engine (ICE) vehicles.
The challenges Hertz faces in its EV strategy include high maintenance and operational costs, profitability pressure, market demand uncertainty, and strategic recalibration. The maintenance costs, exacerbated by the less cautious driving of Uber drivers who constitute half of Hertz's Tesla fleet, have led to an additional charge of $245 million.
As Hertz looks to the future, West's appointment marks a new chapter. His goal is to stabilise the company financially, control costs, restore profitability, and adjust fleet composition in response to market realities. The company's goal to emerge as a leading EV broker faces serious headwinds, but with West at the helm, Hertz is determined to weather the storm and emerge stronger.
[1] Business Insider [2] CNBC [3] Reuters
- Gil West, the new CEO of Hertz, is focused on making the company's electric vehicle (EV) initiatives profitable, aiming to sell a significant portion of the Tesla fleet in favor of internal combustion engine (ICE) vehicles to reduce high maintenance and operational costs.
- Amid the challenges facing Hertz's EV strategy, including escalating costs and profitability pressure, the company hopes to restore financial stability and adjust fleet composition in response to market realities, with technology playing a crucial role in their operational strategies.
