Hertz is backtracking on its big EV bet.
The car-rental firm said it’s selling 20,000 EVs — about one-third of its electric fleet of Teslas, Volvos, Polestars, and more — partly due to repair and maintenance costs.
It’s a big blow to the EV industry, which is already in the throes of slowing growth as the waves of early adopters dry up and prices remain stubbornly high for potential new buyers.
In a Thursday note to clients, Adam Jonas, the head of auto and space research at Morgan Stanley, called the move “another sign that EV expectations need to be reset downward across the market.”
It’s also a warning about the cost of EV ownership to drivers thinking about switching from gas to electric.
“While consumers enjoy the driving experience and fuel savings (per mile) of an EV, there are other ‘hidden’ costs to EV ownership,” Jonas added, citing insurance, repairs, charging infrastructure, residual-value retention, and range anxiety.
Repairs are one of the biggest culprits contributing to a higher cost of ownership for EV drivers.
Mitchell, which supplies data for insurance and repair companies, has found EVs — and particularly Teslas — are more expensive than gas-powered cars to repair. The firm said repairs in the third quarter of 2023 cost an average of $5,552 for Teslas, $4,474 for other EVs, and $4,205 for everything else, according to Kelley Blue Book and Automotive News.
Servicing EVs may also be less convenient for some owners. Many EV startups operate on a direct-to-consumer model, so they may not have as many service centers as traditional automakers. That means some owners may have to drive long distances — or, in some cases, face hefty towing bills — for maintenance and repairs.
To get the most out of an electric vehicle, it’s usually recommended to install some form of fast charging at home. These chargers cost anywhere from $250 to $750, and installation can cost about $1,600.
Depending on your state, energy usage for overnight charging can get pricey. Electricity prices can vary widely by state, too, with the cost savings for electric versus gas being much more substantial on the West Coast, according to Energy Innovation.
And if you run out of battery on a road trip, a gas can isn’t going to cut it — and tow trucks are expensive. Though there is a growing ecosystem of roadside EV assistance.
You might save some money here. There aren’t pistons to lube or spark plugs to change in an EV, but that doesn’t mean there’s nothing to keep up.
Brake pads may not wear as fast, thanks to regenerative braking, but tires on EVs typically handle more weight due to heavy batteries. EVs’ instant acceleration also means more wear and tear.
Other features requiring regular maintenance — such as windshield wipers and suspensions — are universal in both EVs and gas-powered vehicles.
Insurance premiums on EVs tend to be higher since they’re a function of MSRP and repair costs, Kelley Blue Book said.
The average new car sells for around $46,000, and the average new EV costs closer to $50,000, J.D. Power said. Insurance premiums for all cars average around $146 a month, according to Insurify.
A recent study from iSeeCars found that electric cars in the study had an average five-year depreciation rate of 49.1% compared to an industry average of 38.8%.
Among all EVs, Tesla’s Model 3 has the best resale value, falling by only 42.9% in five years. But as Tesla offers more discounts for new models, that could quicken the pace of depreciation.
Of course, everyone’s situation is different. Many variables can impact the cost of ownership, such as driving frequency and length, weather, proximity to service centers, and more. And federal EV incentives of up to $7,500 can make EVs more affordable for those who qualify.
Extracted in full from: https://www.businessinsider.com/ev-maintenance-repair-hidden-costs-ownership-hertz-tesla-2024-1