Rent-a-car CEO Stephen Scherr is being forced out at Hertz Global Holdings Inc. after he bet big on electric vehicles and lost. Big time.
Scherr put millions into a fleet of EVs to rent to customers only to find that the idea was a huge loser. Not only did customers not want to rent EVs, but the whole fiasco was a financial boondoggle in every other way — even if customers would have ended up loving them.
Last Friday, Hertz announced that Sherr, 59, was stepping down and will be replaced with Gil West, the former chief operating officer of General Motors Co.’s Cruise robotaxi unit, according to Forbes magazine.
Making matters worse, the foolish Scherr took his position as head of the company just as it emerged from bankruptcy, only to make grand bets on EVs, causing the company to go right back down the tubes.
Scherr put in huge orders for EVs from Tesla, Volvo, GM, and others.
But the purchases almost immediately went south for Hertz because many of these companies — especially Tesla — slashed the prices of their cars because of flagging demand, but only after Hertz made their purchases. Meaning that almost immediately, Hertz’s financial position was damaged by cars that were suddenly worth far less than they just bought them for.
Then, Hertz tried to sell off about 20,000 EVs and discovered no one wanted to buy them. And when they did sell the, the resale value was a pittance.
After news of Sherr’s demise broke, shares of Hertz fell 2% after regular trading in New York Friday.
All this led to Hertz reporting big losses in the fourth quarter last year. In Feb., Hertz reported losing $418 million.
The company said it lost $1/36 per share, which was more than the 76 cents a share loss that analysts predicted.
Take this as a lesson, folks.
If you own an electric car, you have a giant, money-wasting boondoggle on your hands.
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