2023-12-06 09:22:33
Two Major Car Rental Companies Decommission Tesla Vehicles due to High Repair Costs and Reduced Residual Value
In a surprising turn of events, both HERTZ and SIXT have announced plans to gradually remove Tesla vehicles from their fleets. This decision comes after both companies experienced significant challenges with the electric vehicles, including high repair costs and reduced residual value.
Last October, HERTZ made headlines when it revealed its intention to sell the fleet of 100,000 Tesla Model 3s it had purchased. The initial vision to lead the electric revolution in the car rental world was shattered when the company realized that the vehicles were damaged to a greater extent than normal vehicles, and that their repair costs were exceptionally high. Additionally, the scrap value of the fleet was greatly affected by steep price reductions from Tesla. These factors combined created a value destruction of about 30% in the fleet’s residual value.
Following suit, SIXT has announced that it will also gradually decommission its fleet of Tesla vehicles. The company cites the same reasons as HERTZ, pointing to Tesla’s sharp price cuts that have negatively impacted the residual value of the vehicles. Additionally, like HERTZ, SIXT has expressed concerns about the high repair costs of the electric vehicles compared to internal combustion vehicles.
However, despite these challenges, both HERTZ and SIXT have insisted that they will continue to increase the percentage of electric vehicles in their fleets in the coming years.
These developments come amidst a larger crisis in the electric vehicle industry. Major automakers, including Volkswagen, Ford, GM, and Toyota, have either frozen or postponed plans for battery factories and the production of electric vehicles. Furthermore, Mercedes has voiced concerns about the “brutal” and unsustainable price war that has emerged in the electric vehicle market, stating that many manufacturers are now losing money on each unit.
Ultimately, the decommissioning of Tesla vehicles by HERTZ and SIXT reflects the broader challenges facing the electric vehicle industry and raises questions about the future viability of electric vehicles in commercial fleets.
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