Hertz EV Sell-Off: Renting Teslas Just Got Harder

If you have planned a road trip recently, you may have noticed a shift in the rental car options available to you. Hertz, one of the largest rental agencies in the world, is making a significant U-turn on its electric vehicle strategy. The company is in the process of selling off approximately 20,000 electric vehicles from its fleet. This move impacts availability for travelers and signals a major change in how rental companies handle the transition to electric power.

The Reversal of the "Tesla Gamble"

To understand why this is happening, you have to look back at 2021. Hertz made global headlines by announcing plans to order 100,000 Teslas. It was a massive bet intended to position Hertz as the leader in modern, eco-friendly travel. They wanted to make electric vehicles (EVs) roughly 20 percent of their global fleet.

However, the reality of operating a massive electric fleet proved more difficult and expensive than expected. The company is now offloading about one-third of its global EV inventory. These cars are primarily Tesla Model 3s and Model Ys.

There are two main financial reasons driving this sell-off:

  • Collision and Repair Costs: Hertz discovered that repairing an electric vehicle is significantly more expensive than repairing a traditional gasoline car. Parts are costlier, and the labor requires specialized technicians. When you combine this with the fact that rental cars are often driven in unfamiliar territory by drivers unaccustomed to the instant torque of an electric motor, the collision rate was higher than anticipated.
  • Depreciation: Tesla aggressively cut prices on new cars throughout 2023 to compete with other manufacturers. While this was great for new buyers, it destroyed the resale value of Hertz’s existing fleet. As the value of new Teslas dropped, the value of Hertz’s used assets plummeted.

Hertz expects to take a charge of approximately $245 million related to depreciation expenses from this sale.

What This Means for Your Next Rental

If you are a traveler who prefers renting EVs, your options are shrinking. The inventory of electric vehicles at airport locations and neighborhood branches is decreasing significantly.

1. Harder Availability for Specific Models

Previously, you might have been able to specifically book a “Tesla Model 3” or “Polestar 2” with confidence. With 20,000 fewer units in circulation, these specific classes will likely be sold out more frequently. You may be forced to book a “Manager’s Special” or a standard sedan instead.

2. A Return to Gas-Powered Options

Hertz has stated clearly that a portion of the proceeds from selling these 20,000 EVs will go toward purchasing internal combustion engine (ICE) vehicles. If you prefer traditional gas cars because you do not want to worry about finding charging stations in an unfamiliar city, this is actually good news. You will likely see a refreshed fleet of newer gas-powered sedans and SUVs entering the rotation to replace the outgoing Teslas.

3. Changes in Rental Pricing

Supply and demand dictate pricing. With fewer EVs available, the daily rate for the remaining electric cars may increase. Conversely, if Hertz floods its fleet with more economical gas cars, standard rental rates might stabilize or become more competitive.

The "Hidden" Problem: The Renter Experience

Beyond the financials, Hertz faced a logistical hurdle: the customer experience. Renting an EV is very different from owning one. When you own a Tesla, you charge it at home overnight. When you rent one, you have to find public chargers.

Many renters found the experience frustrating.

  • Charging Anxiety: Travelers often do not have time to sit at a charging station for 30 minutes before returning a car to the airport.
  • Refueling Fees: Returning an EV with a low battery often incurs high recharge fees, similar to returning a gas car with an empty tank.
  • Learning Curve: Drivers unfamiliar with regenerative braking or the Tesla screen interface were more likely to have minor accidents or scrape wheels, driving up those repair costs mentioned earlier.

By reducing the fleet, Hertz is likely trying to keep EVs available for the “power users” who specifically want them, rather than pushing them on general travelers who might find the technology burdensome.

A Silver Lining: Buying a Used Tesla

While this news complicates renting, it creates a unique opportunity for buying. Hertz is selling these vehicles directly to consumers through its “Hertz Car Sales” program. This has flooded the used car market with thousands of 2022 and 2023 Tesla Model 3s.

The pricing is aggressive. You can find used Hertz Teslas listed for as low as $21,000 to $25,000. This is significant because:

  • Tax Credit Eligibility: Under the Inflation Reduction Act, used EVs sold for under $25,000 may qualify for a tax credit of up to $4,000 (or 30% of the sale price).
  • Warranties: Many of these cars still have remaining factory warranty coverage on the battery and drive unit, which typically lasts for 8 years or 100,000 to 120,000 miles.

However, buyers must be cautious. These are ex-rental cars. They may have high mileage for their age (some have over 80,000 miles), and they may have cosmetic wear and tear consistent with rental use. The batteries have also likely been “fast-charged” frequently, which can degrade battery health faster than slow home charging.

Is the EV Rental Dream Dead?

Hertz is not abandoning electric vehicles entirely. They still plan to offer them, but they are right-sizing the fleet to match actual demand rather than projected hype. Other rental companies like Sixt have also pulled back on Tesla, citing similar issues with depreciation and repair costs.

For the immediate future, renting a Tesla will be a niche choice rather than the default standard Hertz once envisioned. If you plan to rent an EV for your next trip, book early. The days of walking onto the lot and having rows of unsold Teslas waiting for you are coming to an end.

Frequently Asked Questions

Why is Hertz selling so many Teslas? Hertz is selling them primarily due to high collision repair costs and significant depreciation. The value of the cars dropped faster than expected because Tesla lowered the price of new vehicles, and repairing the EVs proved much more expensive than repairing gas cars.

Can I still rent a Tesla from Hertz? Yes, you can still rent a Tesla from Hertz. The company is selling 20,000 units, which is about one-third of their electric fleet. They will still have EVs available, but there will be fewer of them, so availability may be tighter.

Are the used Hertz Teslas a good deal? They can be a financial bargain, with prices dipping near $20,000. This makes them some of the cheapest EVs on the market. However, you should inspect the vehicle carefully for wear and tear and check the battery health, as rental cars endure tough usage conditions.

Does this mean renting a gas car will be easier? Yes. Hertz plans to use some of the money from the EV sales to buy more gas-powered vehicles. This should increase the availability of traditional cars for travelers who prefer them.