Hertz CEO steps down following costly failed EV push

Hertz Global Holdings Inc. announced that its chief executive officer, Stephen Scherr, will step down from his position at the end of the month, according to a Friday press release.

Earlier this year, the rental car company moved to trim its electric vehicle inventory despite previously setting targets to transition 25% of its fleet to EVs by the end of 2024. Citing costly repairs, Hertz stated that it would sell 20,000 vehicles, or roughly one-third of its global EV fleet, and reinvest the funds in gas-powered alternatives.

The company agreed to purchase 100,000 Teslas by the end of 2022 and 65,000 Polestar vehicles over the next several years. Hertz has since re-evaluated its EV investments.

In January, Hertz's used car website listed more than 700 EVs for sale, including Tesla Model 3 and Model Y vehicles, BMW's i3, and Chevrolet's Bolt. The firm aims to have all of the cars sold by 2025.

According to Hertz, the costs associated with collision and damage repairs for EVs were significantly higher than those of gas-powered vehicles.

"[C]ollision and damage repairs on an EV can often run about twice that associated with a comparable combustion engine vehicle," Scherr stated at the time of the announcement.

"Remember, in the likes of GM and other [automakers], there's decades of establishment of a broad national parts supply network," Scherr explained. "There's an aftermarket of parts that is there, that is less mature, obviously, in the context of Tesla."

"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, therefore, greater burden," he added.

"Expenses related to collision and damage, primarily associated with EVs, remained high in the quarter," Hertz stated in a January regulatory filing. The company announced last month its largest quarterly loss since 2020 following its decision to pull back on its EV goals.

After two years with the company, Scherr will step down from his position as CEO and will no longer be on the company's board of directors.

Gil West, the former chief operating officer of Delta Airlines and General Motors' Cruise unit, will serve as Hertz's new CEO beginning April 1.

Tom Wagner, vice chair of the Hertz board of directors, stated that the company is "thrilled" to welcome West.

"Gil's experience as a successful leader in operationally intensive businesses will further strengthen the Company's world class team of over 27,000 global employees who work tirelessly to deliver outstanding service to customers daily. We are appreciative of Stephen's contribution over the last two years, including on a number of key strategic initiatives, which Gil will now lead in their continued execution," Wagner said.

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