Hertz Head's Exit Hails EV Fail

The resignation of Hertz CEO Stephen Scherr is only the latest setback for former rental car heavyweight Hertz in the wake of the company’s decision to begin selling off thousands of Tesla EVs reversing a strategy initiated by a previous CEO, former Ford CEO Mark Fields.? The move reflected poorly on Hertz’s execution of an EV-centric rental car plan that amounted to 11% of Hertz’s rental fleet at its peak before the decision to back off.

At the core of the Hertz debacle is the ability or inability to calculate EV residual values.? For this, new solutions from Recurrent and vsNew may have the answer.

Press reports indicate that Gil West, former COO of Delta Air Lines and General Motors’ Cruise unit will take over at Hertz.? Hertz’s decision was driven in part by price cuts by Tesla that negatively impacted residual values for new and used Teslas undermining the financial rationale behind the Hertz strategy.

Equally challenging, though, was managing the EV rental experience, which differed from the rental experience for internal combustion and hybrid vehicles especially as regards vehicle recharging.? It was an unfortunate turn of events as Hertz had successfully launched a program of renting Tesla EVs to Uber and Lyft ride hail drivers – including a waiting list.

It's that residual value issue, though, that represents the biggest takeaway from the Hertz experience for the wider automotive industry.? Understanding the value of a used car is an essential element of any car selling – or renting – operation.? As most new car dealers will acknowledge – in the words of National Automobile Dealer Association board member Wes Lutz – “I sell new cars to legitimize my used car business.”

Used cars is where dealers make their money – that, and the service department.? But if dealers (or rental car companies) can’t reliably calculate residual values, they can’t properly underwrite new or used car loans and leases and will struggle to set pricing on used cars or to bid on them at auction.

Enter two solutions to meet this challenge: Recurrent and vsNew.? Recurrent and vsNew extract EV vehicle data to calculate the status of an EV battery’s performance by tapping into vehicle data via API interfaces (Recurrent) or the vehicle OBDII port (or equivalent, in the case of Tesla) (vsNew).

Both companies are targeting dealers.? Recurrent collaborates with SmartCar to tap into vehicle data via a consumer’s existing telematics/connected car subscription.? vsNew takes the physical approach with an OBDII device to tap directly into the vehicle’s on-board diagnostic data.

Recurrent provides a monthly report to EV owners with a breakdown of charging behavior and status including:

• Expected range
• Range in three years
• Estimated vehicle market value
• Savings (on gasoline purchases)
• Status of battery warranty
• Range comparison to others
• Charging behavior assessment
• A range map and seasonally adjusted range

In essence, Recurrent is something of an educational tool for the first time EV owner while providing more in-depth diagnostics for an EV owner with their second or third EV.? The estimated market value is particularly notable and, not surprisingly, Recurrent offers a vehicle resale service as well.

vsNew claims to offer a deeper dive into the status of an EV battery’s performance with cell-by-cell analytics.? The vsNew OBDII captures a wide range of data including:

• State of charge – displayed, actual, high, low
• Range – displayed, ideal, expected
• Battery capacity – energy remaining
• Up to 108 individual cell voltages (variances reflecting battery degradation)
• Up to 108 individual cell internal resistance (measures cell degradation)
• Up to 36 individual temperature sensors
• Isolation resistance (measures insulation/intrusion)
• Cumulative operating time/cycles
• Cumulative charging time/cycles
• Total energy from rapid charging vs. slow charging
• State of health, as calculated by the battery management system

The two solutions – Recurrent and vsNew – are empowering for both consumers and car dealers.? Recurrent is consumer-centric but exploring opportunities with car dealers.? vsNew is car dealer-centric but considering the prospect of a consumer facing solution.

Both solutions reflect the new relationship consumers (and dealers) will have with cars in an EV-centric world.? Car makers may offer 8- or 10-year warranties on their batteries, but car makers, dealers, and consumers understand that performance will degrade over time.? Managing and understanding the recharging of the vehicle will help preserve that battery performance and the value of the vehicle.

For dealers, or consumers, considering buying a used EV, Recurrent and vsNew offer the tools to evaluate the performance level of the battery – a critical metric to any purchasing decision.? In the end, it all comes down to residual values.? What is the vehicle worth and how long is it likely to last.

All expectations are that EVs will outlast internal combustion vehicles – on average – with much lower maintenance requirements.? The solutions from Recurrent and vsNew will help consumers and dealers build confidence that those expectations are realistic and that they are being fulfilled.? In the end, I think the record will show that EVs are a solid investment whether new or used.? Hertz had the right idea – but execution is everything. Poor execution hurt Hertz.

Hertz, HyreCar Target Ride Hailing, EVs - https://library.techinsights.com/search/analysis-view/ACM-2210-802#pdfId=266a0f7a5a9647cd92fe0e3da5620491 - TechInsights