Apparently Hertz’s purging of electric vehicles from its fleet isn’t going fast enough for the car rental giant. A Reddit user posted an offer they received from Hertz to buy the 2023 Tesla Model 3 they had been renting for $17,913.
Hertz originally went strong into EVs, announcing a plan to buy 100,000 Model 3s for its fleet by the end of 2021, but 16 months later had acquired only half that amount. The company found that repair costs—especially for Teslas, which averaged 20 percent more than other EVs—were cutting into its profit margins. Customer demand was also not what Hertz had hoped for; last January, it announced plans to sell off 20,000 EVs.
Asking its customers if they want to purchase their rentals isn’t a new strategy for Hertz. “By connecting our rental customers who opt into our emails to our sales channels, we’re not only building awareness of the fact that we sell arsenal but also offering a unique opportunity to someone who may be in the market for the same car they have on rent,” Hertz communications director Jamie Line told The Verge.
Hertz is advertising a limited 12-month, 12,000-mile powertrain warranty for each EV, and customers will have seven days to return the car in case of profound buyer’s regret.
According to The Verge, offers have ranged from $18,422 for a 2023 Chevy Bolt to $28,500 for a Polestar 2. We spotted some good deals from Hertz when we last checked, with some still eligible for a federal tax credit.
Hertz’s EV sell off may be winding down, however. Last March we saw more than 2,100 BEVs for sale on the company’s used car site. When we checked this morning, there were just 175 left.
Enlarge/ Used Tesla Model 3s can be had for less than $20,000 now.
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The launch of a new electric vehicle these days is invariably met with a chorus of “this car is too expensive”—and rightfully so. But for used EVs, it’s quite another story, particularly used Teslas, thanks to a glut of former fleet and rental cars that are now ready for their second owner.
“Due to a variety of reasons, Tesla resale values have plummeted, making many Tesla models very affordable now. Plus, for some consumers, an additional $4,000 Federal tax credit on used EVs may apply, sweetening the deal even further. Buying a used Tesla can be a great deal for the savvy shopper, but there are significant things to look out for,” says Ed Kim, president and chief analyst at AutoPacific.
Indeed, a quick search on the topic easily reveals some horror stories of ex-rental Teslas, so here are some things to consider if you’re in search of a cheap Model 3 or Model Y.
“The prices are very appealing, but shoppers must keep in mind that rental cars can and do get abused, and some of these ex-rental units may have nasty surprises stemming from their hard lives. Be sure to have yours checked out thoroughly by a mechanic before buying,” Kim says.
Mismatched tires and minor dents, scrapes, and rock chips are fairly common minor issues. Many of the Teslas that Hertz is selling have been used as Ubers—you can tell it’s one of these if the odometer is approaching 100,000 miles. Battery degradation could be an issue, although most cars will not have lost more than 4–5 percent capacity, and Long Range Teslas should have a powertrain warranty for up to 120,000 miles (or eight years).
“One side effect of Tesla’s widespread and reliable DC fast charging network is that many owners end up relying on it to keep their cars charged rather than dealing with the often considerable expense of installing a home charger and associated home electrical upgrades,” Kim told Ars. As such, you should make sure to check the battery’s health (which can be done on the touchscreen or as part of the inspection) before you buy.
Rental cars can suffer from an excess of slammed doors and trunks—slamming the latter can mess up the powered strut. In the interior, you should expect high signs of wear on some touchpoints, especially the steering wheel and the rear door cards, which can bubble or flake, particularly if the Tesla was used as a ridehailing vehicle.
Other potential headaches
Teslas are very connected cars, and many of their convenience features are accessed via smartphone apps. But that requires that Tesla’s database shows you as the car’s owner, and there are plenty of reports online that transferring ownership from Hertz can take time.
Unfortunately, this also leaves the car stuck in Chill driving mode (which restricts power, acceleration, and top speed) and places some car settings outside of the new owner’s level of access. You also won’t be able to use Tesla Superchargers while the car still shows up as belonging to Hertz. Based on forum reports, contacting Tesla directly is the way to resolve this, but it can take several days to process; longer if there’s a paperwork mismatch.
Once you’ve transferred ownership to Tesla’s satisfaction, it’s time to do a software reset on the car to remove the fleet version.
Not every car will qualify for the $4,000 IRS used clean vehicle tax credit. It has to be at least two model years older than the calendar year in which it is bought used, so only MY2022 and earlier EVs are currently eligible, and it can’t be offered for sale for more than $25,000. The income caps are also half as much as the new clean vehicle tax credit, meaning a single-filing individual can’t earn more than $75,000 a year to qualify.
There are plenty of complaints among the Tesla community that Hertz wasn’t set up to deal with the tax credit, although more recent buyers have reported this has gotten a lot smoother. It’s worth planning ahead and contacting the specific sales branch you plan to buy the Tesla from to make sure they are able to process that paperwork, particularly if you are expecting the credit to be applied to the car’s price at the point of sale rather than waiting until you file your taxes next year.
Buying an ex-rental or ex-fleet Tesla from an independent dealer is also an option. Lots of used car lots have bought Teslas at auction from Hertz and elsewhere, and online anecdotes suggest this is often a more painless experience, particularly when transferring ownership and registering the new owner with Tesla. Then again, you’re more likely to encounter useless third-party warranties and the like if you go this route.
Ex-rental or fleet cars may have had a hard life, but they are also usually maintained far more regularly than most privately owned vehicles. As long as you make sure you aren’t buying a lemon, it’s a good way to get an EV for less than $20,000.
Enlarge/ Hertz currently has more than a thousand Bolt EUVs for sale as they leave its rental car fleet.
Chevrolet
Electric vehicles have many advantages over cars that still use internal combustion engines. They’re far more efficient, they’re quieter, and they usually have much more torque than their gasoline-powered equivalents. But we’re still far from achieving price parity between powertrains. In other words, EVs are expensive.
One place you can find some bargains, though, is the rental company Hertz, which currently has more than 2,100 EVs for sale, more than half of which are affordable enough to qualify for the IRS used clean vehicle tax credit.
Hertz has been adding a lot of EVs to its fleet as part of the company’s decarbonization plan. In 2021, it revealed plans to purchase 100,000 Teslas. However, the controversial car maker had delivered fewer than half of those two years later, and long repair times for customer-inflicted damage have seen the rental agency divest itself of many of those Teslas and diversify its fleet, adding plenty of Polestars, Kias, and Chevrolets.
This January, we learned that Hertz plans to sell off about 20,000 of its EVs, and there are currently 2,115 EVs up for grabs among the 31,134 cars for sale on its used car sales site.
There are 761 Teslas for sale, 63 of which are Models 3 priced at less than $25,000—the price cap for the IRS used clean vehicle tax credit. Some of them have been around the block a few times, with more than 90,000 miles on the odometer (145,000 km), but there are others with less than 50,000 miles (80,500 km) on them.
Better bargains are available if you want a Chevy Bolt—Hertz currently has 1,178 Bolt EUVs (and another eight Bolt EVs) for sale. All of these are cheap enough to qualify for the used clean vehicle tax credit, and plenty of them are low-mileage examples with less than 10,000 miles (16,000 km) on the clock.
There are a handful of other makes and models of EVs also available. You could pick from one of 126 Subaru Solterras, for example, which range from $27,027 to $33,002. And there are 42 Kia EV6s, ranging from $27,120 to $39,901. These are too expensive for the used clean vehicle tax credit, though.
Not everyone reading this will feel entirely comfortable buying an ex-rental car, given the hard lives that such vehicles often lead. But if you’re feeling brave, there are some big savings to be had versus buying new. Anecdotally, the only thing that went wrong with the ex-rental Ford Ka I used to own was a worn-out clutch—not a problem an EV will suffer from.
If you’re looking for an electric car bargain and you’re braver than the average bear, you might want to check out Hertz, the car rental agency. After announcing big plans to purchase tens of thousands of EVs from Tesla and then Polestar, it’s now liquidating a third of that fleet, the company told investors.
After Hertz went bankrupt during the early days of the pandemic, its big EV ambitions began in 2021, when the company revealed it wanted more than 20 percent of its rental fleet to be electric by 2022. To that end, it placed an order for 100,000 Tesla Model 3 sedans, then followed up with an order for 65,000 Polestar 2s.
By early 2023, it was still far short of the ambitious goal, in large part due to Tesla’s inability to actually fill that order in time, and EVs still represent just 11 percent of the total Hertz rental fleet. In total, the Hertz EV fleet is around 60,000 vehicles. But it may not actually be that upset at falling short—it turns out that the electric rental cars haven’t been the panacea it needed.
At the end of Q3 2023, Hertz told investors that significant price cutting during the year had “resulted in lower EV residual values, increasing vehicle depreciation expense and negatively impacting salvage cost.” Additionally, its rental EVs were damaged or crashed more often, and the much higher cost of repairs for Tesla vehicles—on average about 20 percent higher than other EVs—has meant that Hertz’s Teslas earn it less money per vehicle than its other rentals.
Consequently, it’s selling off 20,000 EVs over the course of this year. Currently, the company has over 700 EVs for sale, including 35 Chevrolet Bolts, four Kia EV6s, a single BMW i3 and Nissan Leaf, and then 673 Teslas—552 Model 3s and another 121 Model Ys.
But they are all ex-rental cars, and that means most of these cars have had relatively hard lives and now have plenty of miles on them—the cheaper Model 3s are all closing in on 100,000 miles. Not all of them, though—in New Orleans, there’s a Kia EV6 up for sale with just under 5,000 miles.
Hertz says depreciation of $245 million for its EV assets will show up in the Q4 2023 financial results. The company plans to use some of the proceeds of the sale to purchase more gasoline-powered rental cars.
