Hertz Rightfully Curbs CEO Over Failed EV Project

Jonathan Weiss / shutterstock.com
Jonathan Weiss / shutterstock.com

Even after the Reddit “Stonks” crew helped save Hertz during COVID, their leadership couldn’t help themselves but destroy the progress they had made. Instead of reading the writing on the wall from customers, CEO Stephen Scherr decided to spend his two years as the head of the company trying to make them go green. Keeping in place the order for 100k electric vehicles (EVs), he refused to move away from his predecessor. Not realizing that many travelers don’t have the patience to use an EV when renting, he sunk the company with this decision.

Taking a $245 million loss on the drop in the valuation of its EV fleet, the company didn’t set itself up for success from the start. Daniel Ives, an analyst with Wedbush Securities who specializes in the EV market, said, “The execution and marketing of EVs [by Hertz] was a horror show across the board. It’s a black eye they couldn’t recover from.”

With tough rules about how customers charge their EVs, the lack of “home” charging while out, and no charging infrastructure at their rental locations, Hertz did it to themselves. Given their surges for having to top off tanks or batteries, many found EVs to be a horrible choice while traveling. “They don’t want to go 20 minutes out of their way at five in the morning to find a charging station,” explained Ives.

While previous CEO Mark Fields, an interim CEO who came over from Ford, was the one responsible for the order, Scherr had ample opportunity to modify, change, and even cancel the order. Stockholders and experts warned him of this potential, and yet he stayed the course. Paying the price as the scapegoat, his inaction was ultimately his downfall and something many thought he would avoid. Given his pedigree with 30 years with Goldman Sachs, the bar was rightfully set high, and he came up far too short.