Frigid temperatures across the nation brought even more bad news for the electric vehicle industry. Turns out, the cars don’t charge well when it’s cold outside. Fox News is reporting that in the Chicago area, dead Teslas are stacked up at charging stations while frustrated owners wait hours in the freezing cold to get their batteries charged.
In addition, the cars’ batteries reportedly drain faster in frosty weather. One study from 2019 reported that low temperatures can reduce EV range by 40% or more when drivers are using the cars’ heaters. And yes, when it’s below freezing most people will be using their heaters.
That’s not the only blow to EVs in recent days. Hertz announced it is ditching one-third of their EVs – 20,000 cars -- from their rental fleet and will be replacing them with good old-fashioned gas-powered vehicles, the kind customers actually want to drive.
This is a major about-face from the car rental giant, which has spent billions funding a gradual transition to an all-electric fleet and even hired football star Tom Brady to excite customers with his signature "Let’s Go!" rallying cry.
Alas, it turns out that the supposedly climate-friendly switch is going nowhere. Management explained in a statement, "This will position the company to eliminate a disproportionate number of lower margin rentals and reduce damage expense associated with EVs." That’s corporate-speak for "the cars are unpopular and uneconomic."
Hertz’ EV dump will resonate beyond the car-rental world; U.S. consumers are being enticed by the Joe Biden administration to buy electric vehicles but remain unconvinced. Inconvenience is a major issue as charging stations remain inadequate to large-scale adoption.
HERTZ SELLING 20,000 EVS FROM FLEET, TO REINVEST IN GAS-POWERED VEHICLES
In addition, as Hertz noted, maintenance costs are higher. The FT quotes an analyst at Northcoast Research reporting one issue: "Tyres on EVs burn up maybe 20 to 40 percent faster than an ICE engine vehicle, and tyres are awfully expensive." Accident repairs also cost more. Data from Mitchell, a company that publishes information for body shops, shows the average EV costs $950 more to fix than a gas-powered car. Patching up Teslas is especially pricey.
High purchase prices, even taking into account the lavish subsidies being handed out by the Biden White House, remain the top reason EVs are piling up on dealer lots. Cox Automotive reported in December that overall car inventories in the U.S. totaled 71 days’ supply for the first time in two years but that "Electric-vehicle inventory remains well above the industry average at 114 days’ supply." Those figures do not include Teslas, since the company sells direct to consumers.
CLICK HERE TO READ MORE ON FOX BUSINESS
Hertz emerged from bankruptcy in June 2021, having filed the year earlier when COVID-19 destroyed the travel industry and made the company’s $19 billion debt load unsustainable. Just three months later the firm announced with great fanfare it would spend $4.2 billion to buy 100,000 Model 3 EVs from Tesla, making those cars 20% of its fleet. At the time, then-CEO Mark Fields proudly said the move would "democratize access to electric vehicles."
Hertz promised to install thousands of charging stations at its locations in 65 cities and set up an "expedited app-based booking process for the EVs", according to Car and Driver. The cars would fetch "luxury-level" rental prices, the company said, and could be returned only partially charged. In addition to the Hertz charging facilities, renters could also access Tesla’s network free of charge.
It wasn’t just Teslas that were on Hertz’ shopping list. The company in 2022 also promised to add 175,000 EVs from GM and another 65,000 from Polestar, a Swedish firm.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
Exiting its commitment to EVs is expected to cost some $245 million in "incremental net depreciation expense", a cost which will show up in the quarter just finished. Most likely that includes discounted prices it will have to accept on the cars being sold.
According to one source, the price for a used Tesla 2018 Model 3 has plunged from over $58,000 in December 2022 to just above $38,000 at the end of last year. More broadly, CarGurus reports that used EV prices dropped by one-third last year.
Astonishingly, this wasn’t Hertz’ first failed dive into the EV business. In 2011, the company began offering electric cars and added some Teslas to the mix in 2013. But in 2017 Hertz (and also competitor Enterprise) revealed that they were reducing their EV offerings because they were not popular.
The Biden administration has made adoption of electric vehicles key to their climate agenda. But consumers are not playing ball – failing to be seduced by lavish tax credits or assurances that they are saving the planet. Wait til word gets out that cold weather makes the cars even less reliable and convenient.
Maybe Hertz should stick with the cars that their customers want, and maybe the Biden White House should allow the marketplace to determine the popularity of the vehicles. That would be a real "democratization" of the industry.
