In a surprising turn of events, Hertz CEO Stephen Scherr has announced his resignation from the rental car company. This news comes after Scherr had been at the helm for over two years, leading the company through bankruptcy. The decision to resign follows Hertz’s failed bet on electric vehicles, which resulted in significant financial losses for the company.
The initial announcement of Scherr’s resignation was made on Friday, with much speculation surrounding the reason for his departure. According to a report by Fortune magazine, Scherr’s resignation comes after Hertz placed a large order of 100,000 electric cars from Tesla. This decision, however, proved to be a costly one for the company.
It was reported that Scherr had doubled down on electric vehicles shortly after taking over as CEO, ordering cars not only from Tesla but also from Polestar and General Motors. Unfortunately, these bets did not pay off, with Tesla’s decision to slash prices across its lineup causing significant damage to Hertz’s bottom line. As a result, the company was forced to sell approximately 20,000 of its electric vehicles towards the end of 2023.
Hertz’s decision to sell off its electric vehicles was motivated by a number of factors, including lackluster demand, costly depreciation, and expensive repair costs. These challenges were a direct result of the company’s decision to go green with Elon Musk’s Tesla vehicles. Hertz has estimated that it will take a $245 million charge for the sale and has reported its biggest quarterly loss since the pandemic.
The company’s move away from electric vehicles has raised concerns over the state of the electric car market in the United States. Despite efforts from the Biden administration to accelerate the transition to electric vehicles, American auto dealers have warned that consumers are far less likely to buy EVs over traditional gas-powered cars.
With Scherr’s resignation, Hertz has announced that Gil West will take over as CEO. West, who previously worked as the COO for GM’s Cruise Robotaxi division, is expected to bring new insights and direction to the company. However, his previous role has raised some eyebrows as he was one of the nine Cruise executives that GM dismissed at the end of last year due to a controversy surrounding one of their self-driving vehicles striking and dragging a pedestrian.
While Hertz’s decision to sell off its electric vehicles may be seen as a setback for the electric car market, it has also brought attention to concerns over Tesla’s ability to sustain its growth and maintain its lead in the industry. These doubts have only been amplified by recent events, such as the resignation of two high-level executives and reports of production delays for the highly anticipated Cybertruck.
As the company moves forward under new leadership, it remains to be seen what direction Hertz will take and how it will navigate the challenges of the rental car industry. With the rise of ride-sharing services and the uncertainty surrounding the future of electric vehicles, Hertz will need to adapt and innovate to stay relevant in the ever-changing market.
Only time will tell if Scherr’s resignation will prove to be a turning point for the company, for better or for worse.
