(Bloomberg) -- Hertz Global Holdings Inc. tumbled after the company reported a worse-than-expected loss stemming from the rental-car company’s effort to unwind a failed bet on electric vehicles that has pummeled earnings for most of the past year.
The company posted an adjusted loss of 68 cents a share in the third quarter, more than the 46-cent average deficit estimated by analysts. Hertz took a $1 billion non-cash impairment charge during the quarter, largely due to the decline in fleet residual values over the last year, the company said in a statement on Tuesday. The company attributed the charge to a push to sell cars in its fleet that have lost value, including Tesla Inc. EVs.
Hertz shares fell as much as 12% as of 9:43 a.m. in New York on Tuesday, the most intraday since June 6. The stock had declined 68% this year through Monday’s close.
The results mark Hertz’s fourth-straight quarterly loss, highlighting the toll of the company’s failed strategy to electrify its fleet with EVs from Tesla. New Chief Executive Officer Gil West has been working to fix the damage by selling tens of thousands of those cars while overhauling the company’s management team and making other improvements to operations.
The electric vehicle push tipped the company into crisis starting in the second half of 2023, when Tesla EV prices plummeted and left the company with cars worth far less than it could fetch in the resale market. Repair costs were also higher than expected and customers leased them at lower rates compared to conventional vehicles.
Hertz has said it plans to sell 30,000 EVs by the end of this year and get to a number that its customers wanted to rent. The company on Tuesday said it’s on pace to finish its broader fleet changeover effort by the end of 2025.
West said on a call with analysts that vehicle pricing levels have normalized, which will enable Hertz to lower depreciation costs to about $300 a car per month in future quarters. Monthly vehicle depreciation will likely be $350 to $375 in the fourth quarter and decline after that.
Hertz’s business was slightly weaker in the quarter. Revenue fell 5% to $2.6 billion in the quarter and revenue per unit per month fell 3% to $1,567. Meanwhile depreciation jumped 89% to $537 a vehicle per month.
(Updates with opening shares, depreciation outlook from the third paragraph.)
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