Hertz is replacing CEO Stephen Scherr with Gil West, the former COO of Delta Air Lines and GM's Cruise unit, as the rental car giant grapples with challenges related to its electric vehicle fleet and broader operational strategies, CNN Business reported.
Scherr, who joined Hertz two years ago after a long tenure at Goldman Sachs, is stepping down amid the company's ongoing troubles, including a $245 million blow to its earnings due to the depreciating value of its EVs.
Hertz announced in late 2021 it was buying 100,000 Tesla Model 3s. At that time, Scherr's predecessor, Mark Fields, a former CEO of Ford, was in charge.
But Scherr was CEO when, after reporting record earnings for 2022, the company announced in early 2023 it was increasing its investment in EVs, with plans to order 175,000 from General Motors and 65,000 from Polestar.
“Our team delivered on renewed demand for travel, which is continuing," Scherr said at the time. "In 2023, we will build on our progress to grow our business across the Hertz, Dollar and Thrifty brands. We look to our investments in electrification and technology to yield increasing operating leverage and improved returns and an even better product to our customers around the world.”
However, while EV sales in the U.S. increased by 40% in 2023, Hertz's strategy to capitalize on this trend has not gone as planned. The depreciation of its EVs has been exacerbated by a price war initiated by Tesla. In January, Hertz announced it would sell off 20,000 EVs from its rental fleet -- about a third of the total it has purchased -- due in part to high collision repair and logistics costs. A month later, it announced it was pausing purchasing more EVs from Polestar.
Industry analysts pointed to Hertz's approach to managing its EV fleet as a critical misstep. Daniel Ives of Wedbush Securities criticized the company's execution and marketing strategies, suggesting these shortcomings have left a lasting negative impact on the brand.
Hertz's struggles extend beyond its EV initiatives. The company faced additional setbacks, including a $168 million settlement related to false theft reports of rental cars.
