19 Mar 24
News

Hertz CEO resigns over high Tesla write-downs

Stephen Scherr

The much higher-than-expected write-downs from EVs at rental company Hertz are taking their toll. CEO Stephen Scherr will soon be replaced by Gil West, formerly at the helm of robotaxi company Cruise.

In a press release, Hertz stated that Stephen Scherr, the current CEO (pictured above), will be leaving his post in the coming weeks. Gil West will succeed him, starting 1 April 2024. Scherr apparently resigned on his own accord without citing a particular reason.

Nevertheless, several news outlets have linked his departure to the high write-downs from the company’s electric vehicle strategy. Hertz's goal to emerge as a leading EV broker faced serious headwinds last year due to unexpected maintenance expenses and depreciating vehicle values amid Tesla’s competitive pricing.

Escalated maintenance costs

Bloomberg highlighted that Hertz incurred an extra charge of $245 million due to these issues. A significant contributor was Uber drivers, who nevertheless appreciate their Teslas. They constituted half of the 100,000 Tesla fleet, and their less cautious driving escalated repair costs.

The initiative for Hertz’s electric push predates Scherr, with the bulk Tesla purchase being finalised in 2021 before his leadership. Nonetheless, he put a supercharger on the initiative, ordering roughly 175,000 EVs from General Motors and 65,000 from Polestar.

With Scherr's strategies in place, West is poised to advance its execution, focusing on making it profitable. Having served as the COO of Delta Airlines and CEO of autonomous vehicle company Cruise, West is well-equipped with significant experience in leading operational turnarounds.    

Image Source: Linkedin

 

 

Authored by: Piet Andries