Latest / The Pivot Podcast with Fexingo: How Businesses Change Direction and Survive Disruption / How Hertz Pivoted From Bankruptcy to Electric Vehicles
Transcript
- Lucas: So it's June 2026, and I want to talk about a pivot that felt, at the time, almost too bold to be real — the Hertz turnaround after bankruptcy, and its massive bet on electric vehicles. Luna: Hertz — the rental car company that filed for Chapter 11 in May 2020, right as the pandemic wiped out travel. That Hertz? Lucas: That same company. And within eighteen months of emerging from bankruptcy in June 2021, Hertz announced it was ordering one hundred thousand Tesla Model 3s. One of the largest single EV purchases in history, from a company that had just been in bankruptcy court. Luna: I remember the headlines. It felt like a publicity stunt at first. But then they actually started filling lots with Teslas. Lucas: Right. And to understand why Hertz made this bet, you have to look at the state of the rental car industry in 2021. During the pandemic, Hertz and its rivals had sold off huge chunks of their fleets to raise cash. By mid-2021, travel was coming back faster than expected, and rental car companies couldn't get enough new cars because of the global chip shortage. Luna: So they were paying top dollar for whatever inventory they could find — and rental prices went through the roof. Lucas: Exactly. The average daily rental rate in the US hit something like ninety dollars in summer 2021, versus maybe forty dollars pre-pandemic. So Hertz emerges from bankruptcy with a clean balance sheet, less debt, and a new CEO named Stephen Scherr, who came from Goldman Sachs. Scherr's thesis was: the rental car industry is being disrupted by ride-sharing and EVs anyway, so let's jump ahead and position Hertz as the EV rental leader. Luna: And Tesla was willing to sell them the cars at volume — a win-win. Tesla gets a huge fleet order, Hertz gets instant EV credibility. Lucas: But here's where the pivot gets interesting. The initial rollout was messy. Customers renting Teslas reported long waits at charging stations, unclear instructions on how to charge, and cars returned with low battery. Hertz had to rapidly install charging infrastructure at its airport locations, which is expensive and logistically complex. Plus, Tesla's pricing volatility — they kept cutting prices — meant the resale value of Hertz's fleet was unpredictable. Luna: That's a huge problem for a rental company. Their business model depends on buying cars, renting them for a couple of years, then selling them used. If the residual value drops, the whole economics break. Lucas: And in early 2024, Hertz announced it was selling about twenty thousand EVs from its fleet — including Teslas — and reinvesting some of that money back into gasoline cars. The stock dropped. Stephen Scherr stepped down as CEO a few months later. The narrative flipped from 'Hertz is leading the EV future' to 'Hertz is pulling back on EVs.' Luna: So was the pivot a failure? Or just a course correction? Lucas: I'd argue it's a course correction, not a full retreat. Because if you look at Hertz today — June 2026 — they still have one of the largest EV rental fleets in the world, around thirty thousand vehicles. They learned the hard way that you can't just drop EVs into a rental model designed for gas cars. You need better customer education, more charging infrastructure, and a fleet strategy that accounts for depreciation volatility. Luna: So what did they actually change? Beyond selling some Teslas. Lucas: A few things. First, they diversified the EV brands they rent. Initially it was almost all Tesla. Now they also rent from General Motors — the Chevy Bolt, the Cadillac Lyriq — and from Hyundai and Kia. That reduces their dependence on one manufacturer's pricing and supply. Second, they invested heavily in charging depots at their most popular locations, and they partnered with charging networks like ChargePoint and EVgo to give customers better support. Luna: And I read they also introduced a 'worry-free charging' guarantee — if you rent an EV from Hertz, they cover the cost of charging at partner stations, and they include a clear guide on how to charge. Lucas: Exactly. The customer experience was the biggest gap. If you rent a gas car, you know how it works. An EV is different — you need to plan routes around charging, understand different plug types, deal with range anxiety. Hertz realised that handing someone a Tesla with a quick 'good luck' wasn't enough. So the pivot shifted from a fleet bet to an operational overhaul. Luna: That's a less flashy story, but probably the more important one. It's not just about buying EVs — it's about building the ecosystem to support them. Lucas: Right. And that's the real lesson from the Hertz pivot. The initial move was bold, maybe too bold. But the subsequent adjustments show a company that's learning and adapting, rather than doubling down on a mistake. They're still a major player in EV rentals, but now with a more realistic strategy. The question is whether that will be enough to sustain the advantage. Luna: Before we get into that — Lucas, you and I have done over forty episodes of this show, and one thing I appreciate is that we don't run ads. That's a deliberate choice. If you're someone who gets value from these conversations — maybe it's helped you think about your own business — you can support that choice at buy me a coffee dot com slash fexingo. Lucas: Yeah, no sponsors, no interruptions. If these episodes have moved your work forward in some small way, that link is buy me a coffee dot com slash fexingo. Really appreciate it. Now back to Hertz — because I think the next few years will determine whether this pivot is ultimately judged as visionary or just a costly detour. Luna: What's the biggest unknown? Lucas: Two things. One: how quickly does EV adoption grow among the general rental customer? Right now, EV rentals are still a niche — maybe ten percent of Hertz's total fleet. The bet is that share increases significantly. Two: can Hertz manage the depreciation risk? If EV prices stabilise, the used-car market for EVs matures, and Hertz can predict residuals better, the economics improve. But if Tesla or other manufacturers keep cutting prices, Hertz's fleet value keeps taking hits. Luna: So the pivot isn't just about EVs. It's about building a rental company that can handle a more volatile asset class. Lucas: Exactly. And that might be the most durable takeaway. Hertz's bankruptcy was caused partly by a rigid cost structure and overreliance on airport locations. The EV pivot forced them to become more flexible — more data-driven in fleet management, more customer-focused in operations. Even if EVs never become the majority of their fleet, those capabilities make Hertz a stronger company. Luna: So the real pivot was from a traditional rental model to a more adaptive one — and the EV bet was the catalyst. Lucas: That's the way I see it. The headline was 'Hertz goes electric.' The substance was 'Hertz learns to operate in a world where the car itself is changing faster than ever.' And that's a lesson any business can use. Luna: Even if the road has been bumpy. Lucas: Especially because it's been bumpy. Smooth pivots are rare. The bumpy ones are where the real learning happens.