Hertz CEO Stephen Scherr steps down in wake of company’s disastrous bet on EVs

Stephen Scherr, who ran rental car giant Hertz for over two years after three decades at Goldman Sachs Group Inc., has decided to step down in the wake of a disastrous bet on electric vehicles (EVs) that the company began unwinding in recent months.

Hertz will replace him with Gil West, the former chief operating officer of General Motors’ Cruise robotaxi unit. West will also be joining the company’s board of directors on April 1.

“Gil is a fantastic operator. We worked side-by-side for a dozen years,” Delta Airlines CEO Ed Bastian said in an interview, noting West’s previous role in Delta’s integration with Northwest Airlines. “He’s an innovator, he loves technology, he’s meticulous, he’s curious and he loves a challenge – all great attributes.”

West was previously considered as a CEO candidate by eventual company owners Knighthead Capital Management and Certares Management during bankruptcy proceedings in 2020 when the company was reeling from the economic downturn caused by lockdowns. Executives from both firms had previously approached West to leave Cruise, but GM had big plans for robotaxis at the time and did not want to let West go.

So, in the interim, investors installed Mark Fields, who previously ran Ford Motor Company, before finally settling on Scherr in February 2022.

GM eventually let go of West at the end of last year. Following Scherr’s announcement of his resignation, Knighthead and Certares executives approached West again, saying they are confident that he’d be a better fit with Hertz by virtue of his firsthand experience with EVs.

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West will be the latest in a long line of Hertz CEOs tasked with making the company more profitable amid stiffer competition and a downturn in finances.

Massive push for EVs and lackluster demand hurt Hertz

Scherr, 59, joined Hertz several months after it emerged from bankruptcy and started making splashy wagers on EVs. Under new owners, Knighthead and Certares, the car rental company announced in October 2021 plans to order up to 100,000 EVs from Tesla, a decision that sent the automaker’s market capitalization to soar past the $1 trillion mark at the time. (Related: EV COLLAPSE: Automakers are scaling back and delaying their EV plans as consumer demand wanes.)

Hertz doubled down on its decision to invest in EVs when Scherr took over, placing orders for hundreds of thousands of EVs with electric carmaker Polestar, owned by Chinese giant Geely with Sweden’s Volvo Car. The company only ended up buying a small number of EVs from the two companies.

The company’s bets on a big EV expansion went awry last year when Tesla slashed prices across its lineup to keep vehicle sales afloat. This hammered the resale value of used Model 3 sedans and Model Y crossovers just after Hertz added tens of thousands of them to its fleet of rental cars. By December, Hertz started selling off 20,000 EVs, or about a third of its EV fleet.

Hertz announced its EV sell-down plans in January, citing lackluster demand, costly depreciation and expensive repairs. The Florida-based company took a $245 million charge and reported its biggest quarterly loss since the pandemic.

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More related stories:

EV COLLAPSE: Car dealerships are now rejecting EV deliveries due to low sales.

Bumpy road ahead: Rental giant Hertz dumps electric vehicles for gas-powered counterparts.

Hertz to sell 20k EVs from rental fleet, says electric cars too expensive to repair.

Automaker bigwigs admit EV sales are in jeopardy.

Car rental company SIXT drops Tesla EVs from its fleet due to poor resale value, high repair costs.

Sources include:

WhatsUpWithThat.com

Bloomberg.com

Fortune.com

Brighteon.com