HTZ Stock Alert: Hertz CEO Resigns After Tesla Blunder


  • Shares of rental car operator Hertz (HTZ) fell sharply on an executive shift.
  • The company swapped its CEO after a Tesla (TSLA) centric business decision went awry.
  • HTZ stock struggles amid an EV sector fallout.
HTZ stock - HTZ Stock Alert: Hertz CEO Resigns After Tesla Blunder

Source: Eric Glenn/

Rental car operator Hertz (NASDAQ:HTZ) suffered another ignominious incident, this time largely of its own doing. Former CEO Stephen Scherr decided to step down from the helm after the company’s disastrous bet on Tesla (NASDAQ:TSLA) and other electric vehicle (EV) companies. Unfortunately, the EV sector fallout has been toxic, relentlessly taking down HTZ stock and other electric-mobility-related investments.

According to a Fortune report, Hertz will replace Scherr with automotive industry veteran Gil West. Previously, West served as the chief operating officer of General Motors’ (NYSE:GM) Cruise robotaxi unit. As well, the new CEO will join the board of directors on April 1.

Notably, Scherr joined Hertz several months after the company emerged from bankruptcy. Back in 2020, the implosion of Hertz’s business represented one of the core calamities of the Covid-19 pandemic. However, Scherr’s aggressive push on EVs eventually led to heavy exposure to the underlying sector’s demand fluctuations.

Not helping matters was that Hertz doubled down on EVs, placing big orders with Polestar (NASDAQ:PSNY) and General Motors. Unfortunately, the heavy wagers went south last year when Tesla cut prices across its lineup. Subsequently, this move led to a sector-wide price war. Glaringly, HTZ stock lost 53% in the past 52 weeks.

HTZ Stock Stumbles as EV Woes Continue

Adding insult to injury, the Tesla price cuts naturally hammered the resale value of used Model 3 sedans and Model Y crossovers just after Hertz added tens of thousands of these vehicles to its fleet. Unfortunately, by December, the rental car operator started selling off about a third of its EV fleet.

In January, management announced its EV sell-down plans, citing lukewarm demand, costly depreciation and expensive repairs. It took a $245 million charge and reported its biggest quarterly loss since the Covid crisis. Unsurprisingly, HTZ stock has struggled since the beginning of this year, losing approximately 29%.

Ultimately, Hertz will reduce its EV fleet from 60,000 vehicles to 20,000. Moreover, the company will use some of the funds tied to the reduction to bolster its combustion-powered fleet. Symbolically, that’s a slap in the face for the EV sector, which is facing a huge credibility problem.

First, Tesla’s decision to cut prices reflects a worse-than-expected demand profile. Second, automakers have begun scaling back or delaying their EV plans as the broader investment in the ecosystem outpaced the actual demand for this mobility platform.

Finally, the challenges impacting HTZ stock are not exclusive to one operator. Germany’s Sixt – a leading rental car firm in Europe – is phasing out Teslas from its fleet entirely.

Why It Matters

At the moment, Wall Street analysts rate HTZ stock as a consensus hold. This assessment breaks down as five holds and no other categorizations. The overall price target lands at $9.75, implying about 35% upside potential.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. Tweet him at @EnomotoMedia.

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