Hertz Global Holdings Inc. is undergoing a significant leadership change following its ill-fated venture into electric vehicles, which has resulted in substantial financial setbacks for the company. After a tumultuous period marked by a failed bet on electric vehicles, the rental-car company has announced the departure of its chief executive officer, Stephen Scherr. Scherr, who took the helm at Hertz following a lengthy tenure at Goldman Sachs Group Inc., has opted to step down from his position.
In a move to fill the void left by Scherr’s departure, Hertz has appointed Gil West, the former chief operating officer of General Motors Co.’s Cruise robotaxi unit, as the new CEO. West, who brings a wealth of experience from his tenure at General Motors, is set to assume his new role and join the company’s board of directors on April 1.
Hertz’s foray into electric vehicles began shortly after emerging from bankruptcy, with the company embarking on ambitious plans to introduce 100,000 vehicles from Tesla Inc. into its fleet. However, the subsequent price cuts implemented by Tesla adversely impacted the resale value of the electric vehicles in Hertz’s inventory, resulting in significant losses for the company.
As a consequence of the diminished demand, steep depreciation, and costly repairs associated with its electric vehicle fleet, Hertz initiated a sell-off strategy, divesting approximately 20,000 electric vehicles, equivalent to a third of its EV fleet. The decision to offload a substantial portion of its electric vehicle inventory was driven by the company’s acknowledgment of the unfavorable market conditions and financial implications.
The repercussions of Hertz’s electric vehicle misstep have been reflected in its financial performance, with the company incurring a $245 million charge and reporting its most substantial quarterly loss since the onset of the pandemic. Furthermore, the adverse impact of the failed electric vehicle bet has led to a decline in Hertz’s stock value, with shares falling by 2% following the announcement of the leadership transition.
