Hertz keeps shifting away from electric cars, but stock analysts say it needs a better strategy

08 Feb Hertz keeps shifting away from electric cars, but stock analysts say it needs a better strategy

Hertz is pausing its purchase of 65,000 EVs from Swedish auto manufacturer Polestar, the Financial Times reported Monday. But Hertz’s game plan isn’t sitting well with investors or analysts who say more could be done.

Morgan Stanley analysts favorably labeled Hertz’s stock as “overweight” just a few weeks ago on January 17, but today they changed their recommendation to “equal-weight” and lowered their price target on the stock from $15 to $10. The bank told clients that Hertz needs to do more to change its fleet strategy, and that there is “less visibility and transparency around key economic drivers” this year than expected.

Hertz’s agreement with Polestar, made in 2022 for likely $3 billion, was part of Hertz’s efforts to make a quarter of its fleet electric by the end of this year. Polestar’s CEO told the FT that the rental car giant is pausing the agreement for this year, after buying 13,000 EVs from the manufacturer between 2022 and 2023.

Fast Company reached out to Hertz for comment and will update this story if we hear back.

The move is part of Hertz’s continued attempt to shift its focus away from electric. Just last month, the company announced plans to sell a third of its EV fleet, totaling about 20,000, citing a difference in supply and demand plus high damage costs. Hertz was once seen as a pioneer in the EV space, generating a wave of optimism from EV supporters after the company announced the Polestar deal in 2022 and bought 100,000 Teslas in 2021.

This week’s downgrade comes as Hertz has weathered a tough few months. Shares of the rental car company are down about 10% over the past month and are currently hovering around $8, continuing a drastic slide in value that began in the fall. This month last year, Hertz’s shares were around $19.

Hertz said it lost $1.36 per share (worse than analyst expectations of 76 cents) in its fourth-quarter and year-end earnings report, released Tuesday.

Source: Fast Company