What happened with Tesla and Hertz?

In short, the declining value of the Tesla cars in Hertz's fleet—a decline directly caused by Musk's price cuts—has hit Hertz squarely in its profits. The fact that this is happening to Hertz of all companies is ironic, as the rental agency is not just any customer of Musk.



The partnership between Tesla and Hertz has been a rollercoaster of corporate strategy. In 2021, Hertz made headlines by announcing an order of 100,000 Teslas to electrify its rental fleet. However, by 2024 and 2025, Hertz began a massive sell-off of nearly a third of its electric vehicles (EVs). The primary reasons cited were higher-than-expected repair costs for Teslas and a significant drop in the cars' resale value (depreciation) following Tesla's aggressive price cuts on new models. By 2026, Hertz has pivoted to a more "balanced" fleet approach, reintroducing more internal combustion engine (ICE) vehicles and diversifying its EV offerings with other manufacturers. While you can still rent a Tesla at many Hertz locations, the company has significantly scaled back its "all-in" EV ambition in favor of maintaining better profit margins on its assets.

People Also Ask

Article continues after video. In 2021, Hertz placed the largest-ever vehicle order when it bought 100,000 Tesla Model 3's for the sum of about $4.2 billion, skyrocketing Tesla's value to $1 trillion, according to Bloomberg.

MORE DETAILS

Griffis says he understands why Hertz is taking a break from selling cars. “It's another business is suffering severely due to the travel industry,” Griffis said. “They have to figure out ways to cut costs,” Nick Licavoli said. FGCU economist Victor Claar says this is all a part of Hertz's bankruptcy plan.

MORE DETAILS

Finding quality used cars for sale at great prices can be a daunting process. With this in mind, Hertz Car Sales® was created with the goal of providing used car buyers a wide selection of certified pre-owned vehicles at great no haggle prices.

MORE DETAILS

Hertz will pay $168 million to settle 364 claims related to the company falsely reporting rental cars as stolen. These cases sometimes resulted in people being arrested and even imprisoned.

MORE DETAILS

Numerous lawsuits filed against Hertz in recent years accuse the company of knowingly and falsely reporting its customers to authorities. They accuse Hertz of not investigating alleged thefts before filing theft reports, as well as reporting cars stolen without any verification that they are stolen.

MORE DETAILS

That is because the shortage of semiconductor chips that has held up auto manufacturing persists, leaving rental car companies to operate with lower inventory after they sold off chunks of their fleets in the early days of the pandemic. Building that stock back up has been more difficult than expected.

MORE DETAILS