New CEO, Gil West faces the daunting challenge of steering Hertz
In 2021, Hertz made headlines with its ambitious plan to purchase 100,000 Teslas, a move hailed as a bold step towards electrifying its fleet. This decision, following a $4.2 billion restructuring that rescued the company from bankruptcy just six months prior, sent the brand’s stock soaring by 40 percent within a fortnight. However, fast forward two and a half years, and the once-promising venture has soured significantly.
The rental car giant is now offloading many of its EVs at distressingly low prices, with its stock trading at a mere 20 percent of its 2021 peak. Such a stark turn of events underscores a monumental gamble that simply did not pay off, culminating in CEO Stephen Scherr’s resignation.
Stepping into Scherr’s shoes is Gil West, a former executive at Cruise, another automotive venture that has grappled with disappointing returns. Cruise faced its own setbacks, including the suspension of its driverless car program in California and the recall of 950 driverless vehicles, leading to the ousting of its CEO last November. Now, West finds himself at the helm of Hertz, tasked with navigating the delicate balance between current demand for traditional rental cars and the inevitable shift towards electric vehicles in the future.
Hertz’s experience reflects a broader trend among automotive giants who rushed into early investments in EVs, only to encounter unforeseen challenges. For Hertz, the primary issues stemmed from tepid demand among renters and exorbitant repair costs from suppliers. Consequently, the company has announced its intention to sell off a significant portion of its EV fleet, a decision exacerbated by Tesla’s aggressive pricing strategy that has diminished the resale value of older models.
As the new CEO, Gil West faces the daunting challenge of steering Hertz out of the predicament it finds itself in, charting a path towards sustainability in the fiercely competitive car rental industry.
Opinion:
The fervor surrounding early adoption of electric vehicles often masks the inherent risks involved. Cutting-edge tech’s allure can blind to financial risks. Hertz’s misstep warns against leaping without proper due diligence.
Hertz, like others, was overly optimistic about EV adoption. Investing heavily in Tesla showed lack of foresight.
Moving forward, companies must approach the transition to electric vehicles with pragmatism and a clear-eyed assessment of market dynamics. Rushing to embrace the latest trends may yield short-term gains, but sustainable success demands a more measured and calculated approach.
Article by AutomotiveWoman.com Editor, Juliana Chiovitti, aka @AutomotiveWoman online.
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