Update: Hertz announced on March 15, 2024 that that the CEO was being replaced, effective March 31. Another idiot bites the dust, but not before trashing a big chunk of shareholder funds.

——————

I am not a shareholder of the Hertz Inc car rental company. Fortunately. For I think Hertz shareholders have every right to be thoroughly disappointed in the Board.

As reported by Bloomberg, Hertz has just announced a reversal of its recent plans to electrify its car fleet.

In under 3 years, the big green plan to buy a massive quantity of EVs has been tossed. Sell the cars, at a loss, quickly. Buy more ICE vehicles. For such a debacle to have happened in a short time, the financial losses must have been bad. How much shareholder value was destroyed we cannot know but we can surmise.

The near quarter of a billion dollar hit to earnings is only part of the damage. What is not included in that is the higher future expenses of building up the fleet again and the foregone profits that were not able to be captured thanks to the fleet disruption. By my calculations, this 3 year adventure in Cloud Cuckoo Land could easily have burned through shareholders funds to the tune of $0.5bn. Put the Board and senior management on the scrap heap, too, I suggest.

The associated aspect of this sorry saga is the bad news for car companies such as Ford, GM, Tesla and Volkswagen, who have nailed their investors to their respective EV masts. Megabuck investments in tooling up for a pure EV fleet is common to these car makers. The Hertz announcement must have led to furrowed brows and chewed bottom lips in the management ranks of those companies. Possibly the highest marketplace demand for EVs would come from rental customers. The customer would have the perceived benefit of an EV without the hassle of on going ownership. Such hassles include the battery degradation, huge costs for relatively minor repairs and spiralling insurance premiums. But if Hertz has found that even rental customers prefer ICE vehicles, the demand for private EV ownership would be lower. A bleak outlook for any investor who has been saddled with the off balance sheet liability of management stupidity.