Hertz cites weak demand, high damage costs in decision to downsize EV fleet

Collision and damages costs for EVs remained high in the fourth quarter, Hertz said in a regulatory filing.

The charge is on top of the depreciation costs it expects to record in the quarter in the ordinary course of managing its fleet.

Hertz will continue to offer EVs, but will implement measures to boost profitability, including by expanding infrastructure such as charging stations, growing relationships with EV makers, particularly related to more affordable access to parts and labor, the company said.

“Going forward, the company will continue to actively manage the total size of its EV fleet, as well as the allocation of EVs among customer segments, including leisure, corporate, government and rideshare,” said the filing.

Hertz will reinvest in additional internal combustion engine vehicles and expects to improve adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization across 2024, as vehicles are rotated, and in 2025, by which time all in the plan will have been sold.

“It is expected that this benefit to the company’s financial results will be derived from higher revenue per day and lower depreciation and operating expenses related to its remaining fleet,” said the filing.

“The company further anticipates that incremental free cash flow generation related to this action will approximate $250 million to $300 million in the aggregate over 2024 and 2025.”

Hertz backed its revenue guidance for the fourth quarter of $2.1 billion to $2.2 billion and said its adjusted EBITDA will be negatively impacted by the EV sales plan.

It expects adjusted EBITDA to be a loss of $120 million to $130 million.

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