Hertz Global Holdings reported a loss that was nearly three times worse than analysts expected, as it accelerated sales of electric vehicles to reduce its fleet of Tesla models that have weighed on profits for the past year. 

The company said it lost US$1.28 a share, or US$392 million, against analyst expectation for a loss of 44 US cents a share. The car rental company took a US$195 million charge for the depreciation of an additional 10,000 EVs that Hertz is now holding for sale. While the company met revenue expectations, it is trying to quickly work past its failed bet on electric vehicles that resulted in lower rental rates and higher costs.

New chief executive officer Gil West appears to be willing to take bitter medicine in the near term to get the right amount of EVs in Hertz’s fleet and reduce the damage the cars are doing to the company’s profits. EVs have higher repair costs than traditional gas-powered vehicles, and the values have fallen after Tesla cut prices last year and continued to do so this year. 

“Fleet and direct operating costs weighed on this quarter’s performance,” West said in a statement. “We’re tackling both issues.”

“We’ve put the right strategy in place, and I see a clear path for Hertz to generate sustainable and higher earnings for our shareholders,” he said. 

That will take time, which means Hertz will spend much of this year unwinding its big bet on electric cars made over the past two years at the behest of controlling shareholder Knighthead Capital Management. Hertz ordered 100,000 Teslas in October 2021 expecting prices to hold steady and for renters to snap them up. The opposite happened.

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The company never bought that many and is now trying to sell 30,000 EVs by the end of the year. BLOOMBERG