CEO of Hertz steps down due to significant financial losses associated with Tesla vehicles
Hertz Takes a New Direction with Gil West as CEO
After a challenging year marked by significant losses from an aggressive electric vehicle (EV) strategy, Hertz is looking to turn a new leaf. The car rental giant has appointed Gil West as its new CEO, effective from April 1, 2025.
West, who previously served as the COO of Delta Airlines and CEO of autonomous vehicle company Cruise, replaces Stephen Scherr who is stepping down from his post in the coming weeks. Scherr's departure is voluntary, and he did not cite a particular reason for his departure.
Under Scherr's leadership, Hertz embarked on an ambitious EV expansion, a move that proved to be "ill-advised" and detrimental to the firm's finances. The EV rollout contributed heavily to large losses and operational challenges, causing a $2.9 billion loss in 2024. This was due to poor demand for EVs among customers and high maintenance costs, forcing Hertz to sell off 30,000 EVs and rethink its approach.
West's focus as the new CEO is on stabilizing the business and implementing fundamental strategic changes to transform Hertz and execute a more disciplined approach going forward. The unexpected maintenance expenses and depreciating vehicle values are issues that Hertz faced in their electric vehicle strategy.
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It is worth noting that Scherr ordered roughly 175,000 EVs from General Motors and 65,000 from Polestar as part of his strategies. Uber drivers constituted half of the 100,000 Tesla fleet at Hertz. The initiative for Hertz's electric push predates Scherr's leadership, with the bulk Tesla purchase being finalized in 2021.
The escalated maintenance costs are a significant issue for Hertz's electric vehicle strategy. Hertz faced depreciating vehicle values amid Tesla's competitive pricing. The company incurred an additional charge of $245 million due to escalated repair costs related to Uber drivers' less cautious driving.
While the specific reasons for West's focus on making the electric vehicle strategy profitable are not mentioned, it is clear that he is well-equipped with significant experience in leading operational turnarounds. West's previous role at Cruise, a robotaxi company, suggests he may bring innovative solutions to Hertz's EV challenges.
Several news outlets have linked Scherr's departure to the high write-downs from Hertz's electric vehicle strategy. Hertz's electric vehicle strategy faced serious challenges last year. Despite these setbacks, the company remains optimistic about its future under West's leadership.
[1] - Source: Hertz Q4 2024 Earnings Release [2] - Source: Hertz Q1 2025 Earnings Call Transcript
- Gil West, as the new CEO of Hertz, aims to address the financial concerns triggered by their previous business strategy in technology, particularly the electric vehicle (EV) initiative, by implementing fundamental changes to stabilize the company and execute a more disciplined approach.
- West, with his extensive experience in technology and business, such as his tenure as CEO of autonomous vehicle company Cruise, may leverage technology to bring innovative solutions to the issues Hertz faced in its EV strategy, with the aim of making it profitable and turning the company's fortunes around.
