EV losses mount for Hertz, Tesla registrations decline in CA, Stellantis Q1 revenue

Hey everyone. I want to start things off today by saying thank you. Your continued readership, insightful comments, and industry scoops are what fuels the Car Dealership Guy engine. Thanks for coming along on this journey.

Let’s get into today’s news.

—CDG

1. Mounting EV losses for Hertz

At a glance: Global car rental company Hertz is offloading another 10,000 units from its EV fleet after losing $195 million in Q1 due to vehicle depreciation for writing down the value of EVs. 

Hertz’s depreciation cost per vehicle (DPU) skyrocketed to $592 this quarter. That's a jump from $498 last quarter and more than double the $253 they saw a year ago.

Adding that to the Q4 write-down, Hertz is now out $440 million on its EV gamble. The total number of EVs Hertz is looking to get rid of this year is now 30,000. The company said it will use some of the proceeds from those sales on gas-powered cars. 

Background: Just months after filing for Chapter 11 bankruptcy, Hertz, under former CEO Stephen Sherr, decided to become an early adopter of EV rental fleets. 

In 2021, the company placed a massive 100,000-unit order with Tesla and entered a partnership with Uber to provide 50,000 EVs exclusively to drivers. 

Ever since, the company the company has taken big hits on EVs.

But why are depreciation costs so steep?

Tesla’s continued price cuts. 

In April, the EV maker slashed prices for the sixth time this year ahead of its Q1 earnings results. 

The Model Y Long Range and Performance got a $3,000 price cut each, while the Model 3 Rear-Wheel Drive is now $2,000 cheaper, starting at just $39,990.

Of Note: Gil West replaced former CEO Stephen Sherr in March. 

What’s more: Hertz's electric vehicle fleet turned out to have unintended consequences. 

While offering EVs seemed innovative at the time, it created a burden for some renters unfamiliar with charging or proper EV use. Many customers ended up choosing EVs simply because they were available, not necessarily because they were the best fit, as West explained to analysts on an earnings call.

What it means: EV fleets haven’t taken off the way Hertz expected, and a whole lot of Tesla Model 3s are about to be available for purchase. Although consumers take some risk buying from rental fleets, they can also find some really lucrative deals. In this case, buyers can also apply the $4,000 EV tax credit to these vehicles.

Market Watch

2. Tesla registrations steadily decline in California

Big picture: According to a new report backed by Experian registration data, overall registrations in California mostly held steady with a slight increase, but there have been substantial changes in the mix of brands. 

Quick facts:

• Tesla registrations are down 7.8% year-to-date. 
  

• This is the second quarter in a row Tesla registrations have declined. In Q4 2023, registrations for Tesla cars dropped 9.8%.
  

• Still, Tesla captured 11.6% of the California market, making it one of the top three performing brands, but its growth is waning. It also had the top three-selling electrified vehicle models.
  

• Toyota showed significant gains, increasing to 16.6% market share.
  

• Honda took 10.5% of the market to round out the top three.
  

• EV powertrain market share held steady at 20.9%.
  

• Hybrid registrations in California rose 53%, capturing a 16.6% market (including plug-in hybrids), up from 12% from the same quarter last year.
  

• California continues to lead in EV registrations, making up 32.5% of sales nationwide.

What it means: This pullback on Tesla is probably to be expected given the EV maker sold over 100,000 fewer vehicles than it did in the previous quarter. The results of this study reflect broader trends we’ve been observing for a while. EVs are growing in the U.S. but at a much slower pace than last year.

3. Stellantis revenue drops in Q1

Top line: Early this morning, Stellantis posted a first-quarter revenue of 41.7 billion euros ($44.7 billion), missing expectations.

Results breakdown:

• First-quarter revenue decreased 12%, year-over-year.

• Total global shipments decreased 10% from this time last year to 1.3 million units.

• North America, a key financial driver for Stellantis, generated $20.7 billion in revenue for the quarter, declining 15% from Q1 2023. 

• As the company tackles the transition to producing its “next generation” vehicles built on new platforms, North American vehicle shipments dropped 20% year-over-year.

• Stellantis sold 332,540 vehicles in North America in Q1, a 10% drop from last year.

Why it matters: Stellantis is hedging its bets on plans for the next-generation vehicle platform, but with sales on the decline, inventory is stacking up on dealer lots, especially Jeep (127 days supply), Chrysler (124) as well as Dodge and Ram, which have twice the industry average supply (72). Stellantis will likely have to raise incentives and discounts to make way for the 25 new vehicles it plans to launch this year.

• Two senior executives leave Tesla as the automaker reportedly plans more job cuts.
  

• All U.S. cars are now required to have automatic braking by 2029 per a new mandate from auto regulators.
  

• G7 countries, including the U.S., have vowed to end coal power use by 2035.
  

• Following a Q1 profit drop, Mercedes-Benz has reaffirmed that it does not intend to lower pricing.
  

• Americans are aware and open to inexpensive Chinese EVs according to a new survey.

We’ve got tons of great jobs hitting the CDG Job Board right now. Here are some standouts for anyone looking for their next move.

• OPENLANE is looking for tons of new talent—they’re hiring market sales managers across the country. In Pensacola, Chicago, and Las Vegas to name a few.

• SaaS company BizzyCar has put the call out for account executives in Los Angeles and Orlando (remote).

• Credit Acceptance is hiring over a dozen market area managers across the country, including in Portland and Clearwater.

Looking to hire? Add your roles today—it’s 100% free.

Thanks for reading. Hope to see you back again tomorrow.

— CDG