I’ve hated the ads showing Tom Brady promoting Hertz electric car rentals.
One of them has the legendary quarterback saying, “I just want to go! You know?” before there’s a big razzmatazz and the next thing you know Brady is in — AN ELECTRIC VEHICLE!!!
The ads, which also feature actress and comedian Yvonne Orji, have continually jammed my online feeds.
While Brady has been complimented for his acting ability, the ads are over-the-top hype for vehicles for which there is growing skepticism.
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Now Hertz itself is among those joining the skeptics, on Thursday announcing the sale of 20,000 EVs, to be replaced by gasoline-powered cars, according to Reuters.
The rental giant is one more corporation that hitched itself to the promising star of electric vehicles only to find it was riding a fizzling meteorite.
Tom Brady or no Tom Brady, the market is cool to EV hype. Besides being a problem in car rentals, most people don’t want to buy them, as the automakers have discovered.
The announced sale represents a third of the Hertz EV fleet, according to The Wall Street Journal.
Would you buy an electric vehicle?
Besides declining customer demand for EVs, Hertz cited high repair costs for damage and collision, especially among Teslas. To reduce front-end collisions, the Teslas had modifications to limit torque and speed, Reuters said.
Hertz saw promise in EVs, hoping to have them make up 25 percent of its fleet by the end of this year, according to the Journal.
Two years ago, EV enthusiasm was expected to increase stock prices of rental car companies such as Hertz and Avis, according to The Motley Fool investor service.
At the time, Hertz believed EVs were mainstream, capping that claim with an order for 100,000 Teslas — which, at $1 trillion, made the company the world’s most valuable automaker, an accomplishment surprising even Tesla CEO Elon Musk, according to Reuters.
As carmakers are reducing EV production, the Hertz sale showed a need to “reset downward” EV expectations, according to analyst Adam Jonas of Morgan Stanley.
Jonas said that while drivers enjoy driving the vehicles and appreciate per-mile fuel savings, they don’t like “hidden costs to EV ownership” — costs Hertz cited in a regulatory filing as related to collision and damage.
A major underpinning of the car rental business model is to buy large numbers of cars from manufacturers at fleet discounts, and, following their withdrawal from rental service, sell them in the used car market.
As new EV prices have fallen, so have those of used EVs, leaving Hertz trapped in having paid top dollar for its EV fleet a few years ago, then attempting to sell some of the cars at depressed used-car prices.
If we do some quick-and-dirty calculating, we’ll see new 2024 Tesla Model 3 prices begin at $40,630, according to Car and Driver, compared with a Tesla Model 3 new in 2022 at about $59,000, as reported by the Detroit Free Press.
On its website, Hertz this week listed a used 54,000-mile 2022 Model 3 for $27,295.
Not accounting for certainties of some aspects of apples-and-oranges comparison differences, and not considering fleet purchase discounts, there is more than a $31,000 difference between a new 2022 Tesla Model 3 and the resale of a used one.
Hertz is certainly not losing that much, but it is losing in what is supposed to be a major aspect of its business model.
“While 20,000 cars isn’t a large number in the total used vehicle market, it does mean Hertz will be taking a major loss on each of these sales while further contributing to the trend of falling used EV values,” said analyst Karl Brauer of iSeeCars.com.
Despite dictates by government, promotions by carmakers and hype by Tom Brady, the reality is motorists continue to trust internal combustion technology, the standard for more than a century.
And that, Tom Brady, is how we go! You know?
