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Hertz Is Selling Its Tesla Model 3 Fleet For Cheap · Elon Musk Podcast

• 0:01
  Hey everybody, welcome back to the Elon Musk Podcast.
• 0:05
  This is a show where we discuss the critical Crossroads, the
• 0:08
  Shape, SpaceX, Tesla X, The Boring Company, and Neuralink.
• 0:13
  And I'm your host Will Walden Hertz Rental Cars or Hertz
• 0:17
  Global Holdings announced that it's planned to sell
• 0:21
  approximately 20,000 electric vehicles from its rental fleets.
• 0:26
  This is attributed to the escalating costs associated with
• 0:29
  collision and damage of these vehicles, leaving the company to
• 0:33
  favor less expensive to fix gas powered alternatives.
• 0:38
  Now this announcement impacted the stock market with Hertz
• 0:41
  shares dropping around 4%. Tesla, a significant part of
• 0:45
  Hertz's EV fleet also saw its shares declined by about 3% at
• 0:49
  that time. The financial impact on Hertz is
• 0:52
  pretty substantial. The company anticipates a charge
• 0:54
  of roughly $245,000,000 in the fourth quarter of last year
• 0:59
  related to the deprecation expenses from the sale of these
• 1:03
  EVs and Hertz move highlights the challenging situation for
• 1:07
  EVs in the current market. Growth in EV sales has
• 1:10
  decelerated a little bit, prompting manufacturers like GM
• 1:13
  and Ford to reconsider their production strategies going
• 1:17
  forward. Now Adam Jonas and analysts and
• 1:20
  Morgan Stanley interprets Hertz decision as a cautionary sign
• 1:24
  for the burgeoning EV sector. Right now, he suggests a need to
• 1:28
  recalibrate market expectations for electric vehicles and also
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  for rental fleets. Now Jonas points out that
• 1:35
  despite the appealing driving experience and fuel efficiency
• 1:39
  of EVs, ownership entails additional, often overlooked
• 1:43
  costs. Now, Hertz previous commitments
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  to electric vehicles included an order of 100,000 Tesla cars by
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  the end of 2022 and a subsequent agreement to purchase up to
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  65,000 vehicles from Polestar over five years.
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  And Hertz cited elevated expensive linked to EV
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  collisions and damages as a primary reason for this
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  decision, as mentioned in the regulatory filing.
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  Meanwhile, German car rental company 6th SIXT has also moved
• 2:13
  away from Tesla. They stopped purchasing Tesla
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  vehicles since 2022 and are now selling off their Tesla fleet as
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  part of the regular vehicle rotation and despite divesting
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  from Tesla 6th remains committed to electrifying its fleet,
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  aiming to convert 70 to 90% of its European rental fleet to
• 2:31
  electric by 2030. Now Hertz, while reducing its EV
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  inventory plans to continue enhancing the profitability in
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  its remaining electric fleet. Now market trends indicate a
• 2:43
  decline in used EV prices through most of 2023.
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  This trend is expected to persist with used E VS projected
• 2:51
  to deprecate more than overall used vehicle market in 2024
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  according to Cox Automotive. Fun fact, I used to work for Cox
• 3:00
  Automotive for about two years and I love the experience there.
• 3:05
  Great company to work for great people.
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  Carl Brewer, the IC Cars spokesman, notes that while
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  20,000 vehicles represent a small fraction of the used
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  vehicle market, Hertz's sales will contribute to the ongoing
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  trend of depreciating used EV values, resulting in significant
• 3:22
  losses for the company. Hertz is offering some of his
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  Model 3 vehicles at nearly half their original purchase price
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  with listings as low as $20,000. So get on it.
• 3:33
  If you're looking for an EV, More than likely you can get a
• 3:37
  Tesla for much cheaper than retail.
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  Now this move comes as the company aimed for 25% of its
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  fleet to be electrified by the end of 2024 / 700 E VS,
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  including models from BMW, Chevy, and Tesla are listed for
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  sale on Hertz's used auto website.
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  These sales provide an opportunity for consumers to
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  acquire affordable electric vehicles like model threes and
• 4:01
  recurrent auto Suggest that Hertz test the model threes
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  might qualify for a used EV tax rebate too, so you can save
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  potentially more money now. This situation presents an
• 4:11
  attractive option for you if you're seeking affordable EVs
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  despite concerns over the reliability and high mileage
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  that other rental cars would have too.
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  I know people who have bought edit this out personally.
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  I know people that have bought their vehicles from rental
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  agencies and they turned out to be OK.
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  Nothing really wrong with them. It's kind of like buying a car
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  from a regular person, but just a bunch of different people
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  doing different sort of driving than say what I was told when I
• 4:44
  bought my Subaru, my last Subaru, that it was used by a
• 4:48
  grandma going from her house to the grocery store.
• 4:51
  So which I don't think that's actually true, but you know
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  what? Burlington Subaru you got me.
• 4:57
  But that was a great car, 200,000 miles at that one.
• 5:00
  So they got me on that one. I'm not sure the models or the
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  makes of the model threes or the actual serial numbers, but I'm
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  sure they're in pretty good condition.
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  So to go check them out, see if they're good for you.
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  Now, comparisons with other marketplaces, though, like
• 5:13
  CarMax and Autotrader, show that Hertz's offerings are
• 5:16
  competitively priced. Consumer Reports rates the Model
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  3's reliability as average, supporting the notion that
• 5:23
  Hertz's Tesla vehicles are pretty good values.
• 5:27
  Now, Hertz's decision to sell a substantial portion of its EV
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  fleet shows a big shift in its business strategy, reflecting
• 5:34
  the current challenges and economic realities of the EV
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  market. This move offers customers an
• 5:40
  opportunity to purchase EVs at lower prices with considerations
• 5:45
  regarding their condition and reliability.
• 5:48
  It might be right for you, so go check it out.
• 5:51
  Hey, thank you so much for listening today.
• 5:53
  I really do appreciate your support.
• 5:55
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• 6:02
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• 6:12
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• 6:18
  please take care of yourselves and each other.
• 6:20
  I'll see you tomorrow.