Hertz selloff could be a good time to buy a cheap used EV
Hertz is offloading some 20,000 electric vehicles (EVs) from its rental fleet, which means now could be a great time to buy a used EV at a good price.
Driving the news: The rental car giant said in a regulatory filing Thursday that it will sell roughly a third of its global EV fleet, citing repair costs and weak demand.
- Hertz will use some proceeds from the sales to buy gasoline-powered models.
- The about-face comes about two years after Hertz struck a high-profile deal to buy 100,000 Teslas (about 20% of its U.S. rental fleet) as part of a broad electrification effort.
- "We may have been ahead of ourselves," CEO Stephen Scherr told CNBC.
The big picture: Used car prices have been falling since a pandemic-driven shortage in 2022.
- In 2023, used car prices fell 7%, but pre-owned EV prices were down 22%, per Cox Automotive, mostly because of the cascading effect of Tesla price cuts on new models.
- Hertz's big inventory liquidation will likely add to that downward pressure.
- Plus, a newly enacted federal tax credit on used EVs could make for some enticing deals.
Details: While pre-owned cars are typically sold to dealers at wholesale auctions (if they're not sold privately), Hertz lists its older rental vehicles directly on its own website.
- When Axios checked Thursday afternoon, there were nearly 350 Teslas available at prices up to $39,850.
- Only 17 were priced below $25,000, which is the cutoff to qualify for the tax credit.
- The cheapest model for sale was a 2021 Model 3 Standard Range with about 81,000 miles for $22,600. With the $4,000 tax credit, the final price would be $18,600.
- Some were going for as little as $14,000 after the tax credit earlier this week, according to Electrek, but those are already gone.
Yes, but: Rental cars are notoriously beaten up, so buyer beware.
- Plus, there's the question of how long the battery on a used EV will last.
- EVs haven't been on the road long enough to know for sure, but most automakers say the batteries should last for 15-20 years.
- In a 2023 study, market research firm Recurrent said it seems EV batteries are holding up well, with very few of them needing replacement even once the typical eight-year, 100,000 mile warranty period ends.
What they're saying: "It's a real opportunity for savvy buyers to take advantage," Recurrent CEO Scott Case tells Axios.
- "These cars are all less than 4 years old — their batteries have a lot of life left even if there are a lot of miles on the odometer."
Reality check: EVs accounted for only about 1% of the used vehicle market in 2023, according to Cox Automotive.
Of note: An Uber spokesman said the Hertz decision won't affect the availability of EV rentals accessible to Uber drivers under a separate agreement.
- EVs on the Uber ride-hailing network have doubled in the past year, he said, with 74,000 drivers going electric in North America and Europe.
Note: Cox Automotive's parent company, Cox Enterprises, also owns Axios.