If they truly believed these cars would soon drive themselves, that’s entirely the fault of executives who didn’t do the minimum due diligence. Spending $100k to get a few consultants’ opinions would have been enough to pop that bubble.
That explains quite a lot, right there.
Mark Fields, who had spent ~30 years at Ford and was fired for not moving them fast enough into EVs, was the interim CEO while they searched for and found the Goldman guy for their permanent CEO. It was Fields that announced the deal with Tesla, although you have to wonder how much of it was already in place - he had been CEO for like 3 weeks at that point. Or, you know, maybe his thought process was "I'm not making this mistake twice" and the finance bros loved it and that's why they hired him.
EDIT: Not understanding the downvotes.
Board members and executives have a fiduciary duty to shareholders. They let their hubris get the best of them and that left the company with a fleet of assets that are depreciating rapidly, even by automotive standards. Thus the company is not returning as much value as it could if it had purchased more traditional vehicles.
"I have a fiduciary duty to shareholders" can't just be used by executives and board members to explain away budget cuts and massively upending peoples' lives with layoffs. It should cut both ways.
Or are we going to just finally admit that this excuse only serves to protect management and capital?
That resale value retention was harmed by two things that would not have been evident when they purchased the EVs:
1.) Tesla started cutting prices on new EVs.
2.) Incentives to purchase new EVs stayed high.
If we interpret fiduciary duty that broadly, I think I better start cutting grass instead.
Sounds like the executives who did the deal should have come to an understanding with Tesla about not doing things to massively dilute the value of the fleet.
Either they forgot to, or they bought the bullsh*t. Either way they're incompetent and don't deserve more money than most people will make in their entire lives within the span of a few years of work. Drag them in for a deposition to find out which one it was and recover some of the money.
Who's saying that engineers should be thrown in jail for making a mistake?
I'm saying that there's reason to believe that maybe Hertz's leadership didn't do their jobs. Lawsuits for that kind of thing are filed all. The. Time. in this country. If we're here to create value for shareholders by any legal means, and they don't do that, well... the monetary loss and resulting lawsuit is the risk that justifies the insane amount of money people in that level of the company make. Who knows, maybe the suit would be tossed.
If they don't want to deal with that, maybe a nice six-figure and full benefits compensation package would be more their speed.
It seems to me that sometimes somebody has to try a thing for us all to find out that it doesn’t work. If people with money in the company were sure it was a dumb idea all along, couldn’t they have sold their shares? Or even done fancy options trades to profit from their contrarian certitude?
Why would a court be involved in something like this, where management very clearly said what they were going to do, they did it, and it just didn’t work out the way they’d hoped?
If Tesla's lack of parts is the problem - and the article asserts that as a possible problem - then it's nothing to do with hindsight. Tesla either had the demonstrable ability to provide repair/replacement parts on time, or they didn't. You get that in writing and you have people actually dig to see if the supply chain was there. That's something you check before you ink the deal.
The article also mentions that there are other EVs in the fleet that haven't caused the financial problems. In other words, there's something about how Hertz structured the Tesla deal that was less-than-brilliant.
> Why would a court be involved in something like this, where management very clearly said what they were going to do, they did it, and it just didn’t work out the way they’d hoped?
Because they may not have done their due diligence in signing the deal with Tesla, and it's costing shareholders money. Making bets is one thing; making one that deals with something outside of your ken is another. Your job as a board or c-suite is to find the people to give you the straight dope on things you don't know about, not be distracted by new shiny from Silicon Valley.
I find it easier to believe that Hertz thought electric vehicles would be a big consumer draw but, as a sometimes renter, I have trouble seeing the appeal of dealing with something unfamiliar as a renter aside from maybe a one-time novelty.
I can see why car rental companies expect fossil fuel cars to be returned with a full tank, but for an electric car, they can charge it themselves. Being able to return the car without having to worry about recharging would make the electric cars more attractive.
The challenge here is that they didn't invest in building charging infrastructure at ALL of their locations (neighborhood centers, small airports, hotels, etc).
This is problematic because a renter that decides last minute to one-way their car from a prime location to a non-prime location without charging first essentially took that car out of rev service for the day. An ICE car would never have that problem.
This, of course, was fine when used EVs barely lost their value, but now that they depreciated like a rock since 2023, these cars are a cumulative black hole in forward revenue.
Interesting. I rent just about that often, but I try to get a car that I'm already familiar with. If I'm renting a car, I'm probably somewhere that I'm not familiar with and have my hands and brain full of other stuff that needs attention. The last thing I want to do is add "get used to a different car" to that list.
Most EVs, and Teslas particularly, have very different controls than the cars I am used to. I actively avoid them all mostly for that reason.
I make 2-3 long trips per year, and I rent a car for each. Why?
- I buy cheap, reliable transportation with a focus on commuting. You don't want to be in my car for several hours on a long trip.
- If I break down, the rental company takes care of it. I don't have to find a shop and wait for a part.
- I save a fortune. I know people who base their car-buying decision based off the couple of long trips they make per year. They end up paying 2x - 3x more for their car than I've paid for mine. They also typically have higher fueling costs and higher repair costs.
- When I do get an EV, I don't have one yet, I won't worry about range anxiety
That last point is what I never understood about Hertz - you should be pitching your rentals to EV owners as a solution for range anxiety on long distance trips. Easy peasy! You get sales. Not here's unfamiliar technology you're using in an unfamiliar place, figure it out! How did they ever think that was a smart idea?
It didn't happen to work out. However if it did, they would be hailed as visionary heroes.
Entirely? Like 100%?
The latter can still be fraud, but the bar is much higher. Hertz would have to show that Tesla actually promised self-driving in a contract.
It's only a problem if you are poor.
But more than one part can be guilty.
Big companies seem to be worse than you'd think at filtering out obvious nonsense vendor claims.
(Notably, people at Walgreens were going, "er, yeah, not sure about this, seems like bullshit", but they were overruled by the decision-makers).