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Electric vehicles face potential damage to their reputation as rental giant Hertz plans to replace 20,000 EVs, including Teslas, with gas-powered cars. Hertz, the largest fleet operator of EVs in the U.S., cites high repair costs and weak demand as the key factors behind the decision.
Concerns over Second-Hand Market and Buyer Retention
According to Reuters, industry experts and analysts are concerned that Hertz's move will impact the second-hand market for EVs and discourage potential buyers, who are already reconsidering purchases due to increased borrowing costs. Karl Brauer, an analyst at used-car aggregator iSeeCars.com, notes that the perception of EV technology could take a hit as mainstream consumers hesitate to invest in EVs.
Repair Costs and Lack of Expertise Hindering EV Adoption
As per US News, repair costs for EVs are higher due to a lack of expertise and challenges in sourcing replacement parts for these relatively new vehicles. Hertz CEO Stephen Scherr, speaking at a conference last year, highlighted elevated costs resulting from damages to certain EVs, particularly Teslas. Limited expertise and difficulties repairing EVs pose significant challenges for startups and legacy automakers entering the EV market.
After accidents, many EVs have no practical means of repairing or assessing slightly damaged battery packs. This forces insurance companies to write off cars with minimal damage, increasing premiums and undermining the cost-saving benefits of going electric. Additionally, experts note that Hertz may have to sell the EVs at discounted prices due to their higher mileage and visible damage.
A survey conducted by Consumer Reports revealed that EVs from the past three years experienced 79% more problems than conventional cars, indicating a discrepancy between the two types of vehicles. Startups and legacy automakers new to the EV space face teething problems, leading to increased EV performance and reliability issues.
Depreciation of Used EVs Outpaces the Overall Used Car Market
According to data from iSeeCars, the value of used EVs dropped by 33.7% between October 2022 and October 2023, while the overall used car market only saw a 5.1% decrease. This decline in value further adds to concerns surrounding the second-hand market for EVs. However, some experts believe that high repair costs are a short-term challenge that will diminish as more EVs hit the road.
Photo: PR Newswire
