Hertz appeared as the biggest Tesla customer in October 2021 when it announced plans to buy 100,000 EVs from the market leader. Two and a half years later, Hertz's love affair with electric vehicles appears to wane, with very few electric cars added to its fleet in the first quarter.

Hertz boasted about transitioning its massive car rental fleet to electric vehicles, with plans to buy 100,000 Teslas by the end of 2022. The rental juggernaut also signaled an intention to purchase EVs from GM (175,000 cars) and Polestar (65,000 units), totaling 340,000 EVs. Considering Hertz currently has around 505,000 vehicles in its international fleet, the three agreements would have covered the electrification of 67% of its fleet. The plans were ambitious, but the end of 2022 showed that Hertz barely reached 48,000 electric vehicles in its fleet, most of them being Tesla.

One quarter later, Hertz announced during the Q1 2023 earnings call that its EV fleet comprises 50,000 cars, which means it bought very few electric vehicles during the quarter. The electrification process also seems to lose steam, considering that the EV percentage dropped from 11% of the fleet in Q4 2022 to 10% in Q1 2023. However, Hertz's overall fleet has become larger, which means the car rental company has bought more ICE vehicles instead of EVs.

Despite the obvious, Hertz CEO Stephen Scherr said that the company's electrification strategy helped it achieve better-than-expected results in the first quarter. Hertz generated $2 billion in revenue, up 13% year-over-year. Scherr is luring investors with investments in technology and electrification, crediting the good results on this initiative. Although the EV fleet has not changed much, Scherr revealed that Hertz has begun taking deliveries of new EVs from GM and other carmakers.

We're unsure what prompted this stagnation, especially as Tesla cut the prices significantly starting in January. Not only that, but the EV maker no longer has a production problem and is struggling to increase demand. Buying tens of thousands of Teslas at this time would've been a no-brainer for Hertz had it wanted to add all those electric vehicles to its fleet. The Model 3 is at its lowest price in years, and the Model Y is finally becoming affordable. Scherr did say that Hertz profited from the recent price cuts, but this hardly reflected in the number of EVs in its fleet.

One of the reasons could be that customers don't want to rent electric vehicles. In January, we discovered that many unrented Teslas were filling the parking lots, despite Hertz offering better rates on them. Stories on social media show that customers are not used to driving electric vehicles, and Hertz does nothing to educate them. The company handed them the cars with depleted batteries and didn't tell customers how outside temperature and driving style affects range. Because of that, most of them end up disappointed, adding to the urban legend that EVs are inferior to gas-powered cars.

I had just covered the BMS_u029 issue when I last wrote about how crucial it is for battery electric vehicle (BEV) buyers to know how much their battery packs will last. Although this error code is allegedly just a grim prognosis, affected customers suspect it is on purpose: the battery packs are all failing at the same time – as if they were programmed to do so. What if they can only live that much? No automaker has addressed that: some even brag that BEVs are the future and nothing can beat them. If that were true, cars would be doomed. While they ignore the limited lifespan of battery packs, BEVs will remain as rich people's toys.

The average Joe is used to fixing expensive goods – such as vehicles. He took a long time to afford his car and will probably take a lot more to buy another one, which means that whatever he is driving has to last. When the time comes to replace it, the old car will be part of the payment, so it would better depreciate very little. Only affluent folks buy new vehicles with no concerns – usually every year.

There was a time when fixing a smartphone or a laptop made sense. Now, when their batteries die, it is generally time to buy a new one because the hardware and software will have evolved so much in that short time that you'd only fix these gadgets if you had an emotional attachment to them. The money you will spend on repairs will be close to what you'd pay on a new device. BEVs will force us to apply the same logic to cars, mainly due to their battery packs. This may be the strongest reason (even if not the most obvious) for them to be called "computers on wheels" – a very poor choice of words when you remember how often computers crash.

Batteries have low energy density. When you make a pack with them, a 75-kWh unit holds as much energy as 2 gallons of gasoline. That means you need loads of batteries to have a decent range. The bigger the battery pack, the more expensive it is. There are several technical challenges with keeping the component healthy, and one of the major ones is making all cells have similar charges and release them at the same speed. Early battery packs were divided into modules, so the car had to keep the cells inside the module and the modules inside the battery pack balanced with each other. All you need is one cell or module to fail for the whole battery pack to face problems.

Several businesses have emerged to try to service battery packs. Companies like 057 Technology and ReCell are specialized in them, particularly in Tesla vehicles. However, they do not manufacture these components: they only try to recover them. That alone is quite a challenge because Tesla did not conceive its battery packs to be repaired. So much so that it just replaces the defective components. On top of that, these battery packs evolved into the structural units the Texan Model Y gets. If these new battery packs fail, it is not economically viable to repair them. Substitution is the only choice.

The problem is that replacing battery packs costs a fortune. Owners of the Model S units with BMS_u029 and BMS_u018 error codes are receiving estimates of more than $14,000 for remanufactured battery packs and more than $18,000 for new ones – including labor. These early Model S units are worth around $25,000. Even with a remanufactured battery pack, you'll spend more than half the vehicle's price to fix it. Insurance companies usually write off any car that has a repair bill that exceeds 50% of its value. Can you see where this is leading us? Repairing is so expensive that buying a new BEV (or any other new vehicle) is much more attractive. The truth is that governments and activists are pushing us to disposable cars.

I already hear electric car advocates screaming that I am out of my mind when I say this is a rich people's game or that these BEVs are headed for the trash after they get old. After all, we have so many BEVs at affordable prices! The BYD Dolphin costs only the equivalent of $15,000 in China! Sure, but who can spend $15,000 every time they need a new ride? Most people can't. Have you seen how much the Dolphin will cost in Europe? Between €30,000 ($33,099 at the current exchange rate) and €38,000 ($41,925). Even if it kept the Chinese price tag and if other competitors charged even less, that's not the core problem. What we should be discussing and have completely failed to do is how much a battery pack costs compared to the rest of the car. Any car.

See the inexpensive Wuling Hongguang Mini EV, which is not even considered an automobile in most markets – it is a quadricycle. In China, it starts at RMB32,800 ($4,746). In Europe, a rebadged Mini EV costs around €10,000 ($11,033). How much does its 13.9-kWh lithium iron phosphate (LFP) battery pack cost? I have no idea. First, it is sold in China, which makes it more challenging to get information about the electric quadricycle. Second, the Mini EV is not old enough to need a battery pack replacement.

I searched for a 10-kWh LFP battery pack just for us to have an idea of how much it could cost. Fortress Power sells one: a stationary LFP energy storage system (ESS) with that capacity. The lowest price I found for it was $4,750, more than the Wuling Hongguang Mini EV costs in China and almost half of its worth in Europe. Consider that a used quadricycle will be worth much less than a new one and that 10 kWh is less than 13.9 kWh. That said, the Fortress Power ESS confirms how bad the situation can be for BEVs when battery pack replacements are needed.

Whether the vehicle is an affordable Mini EV or a GMC Hummer EV, buying a new one will probably pay off rather than fixing the BEV with the dead component. There are other elements to make purchasing a new electric car more attractive than repairing the used one. The owners now mending their Teslas with catastrophic error codes will have only four years of warranty on their battery packs, whether they are new or remanufactured. They would have twice as much coverage if they bought a new vehicle. The best shot customers have is to buy a new car. If they are disposable, that will eventually kill most of the used automobile market.

Who will buy a second-hand BEV when its battery pack is out of warranty? Who will keep them when this legal protection is over? Toyota is offering coverage for ten years or 1 million kilometers (621,371 miles) on the bZ4X battery pack, but only in Europe and for customers who accept to follow an annual EV Health Check. Good, but what happens after ten years? The older Model S units with failing battery packs are still ten years old: the car's first deliveries happened in June 2012.

The warranty will be the only element keeping BEVs from hitting junkyards. Nowadays, it is not unusual to buy old combustion-engined vehicles that are 15 to 20 years old in the used market. I have recently purchased a 21-year-old Opel Zafira with its original mill that runs like clockwork. You can have a fair idea of how an engine and a gearbox are just by putting them to work. What about battery packs? You can't check their interior. Even if you could, what would you look for? Signs of corrosion? What if their cells have manufacturing defects, such as the ones with the Hyundai Kona Electric and the Chevrolet Bolt EV? They may fail without warnings. In other words, forget about checking the condition of used BEVs: that will not mean much when the real danger is almost impossible to determine.

Theoretically, carmakers could take a few measures to address this problem. They only have to tell us if they are feasible or not. If the answer is negative, cars will be really limited to a privileged few, with all the consequences that this should bring. If automakers are not able to answer or are unwilling to do so, they are probably as lost as the people who are beginning to learn that their EVs will no longer work – and they are equally screwed. There's still time to avoid that, but I'll leave it to a future story.

Legacy automakers never lower car prices. They may offer discounts and promotions, but it is always against a fixed MSRP price tag. That allows buyers to compare the benefits and want to take advantage of the bargain. Tesla decided to be innovative with its pricing strategy and lowered prices six times in a row. The sales numbers from China-made vehicles prove how wrong playing with prices can go.

The company sold 75,842 units made at Giga Shanghai, including both the internal market and export units, which was apparently a good result when compared to April 2022, but it was 14.7% worse than the sales in March – when prices were higher. For a company that insists that it has no demand problems, that is hard to explain. For the record, the sales in April 2022 were meager: only 1,512 units.

The international health crisis was hitting hard in China, and Giga Shanghai was closed due to COVID-19. Elon Musk did not defy the Chinese government shutdown orders, which probably prevented him from tweeting that if anyone were to be arrested, that should be him. He only did that at the Fremont factory in May 2020. Tesla's compliance with the Chinese orders led to low sales that were pretty easy to beat.

In March, the company sold 88,869 cars made in China, which includes those exported to Europe. In other words, and despite the record the Model Y is breaking more recently, the lower sales numbers probably also have to do with lower European demand. Insurance numbers suggest Tesla sold a bit more than 29,000 battery electric vehicles (BEVs) to customers in China, which leaves almost 47,000 units for export markets.

Although it is common for Tesla to send more BEVs abroad at the beginning of each quarter, the company's inventory is building up. That said, it could have sold many more vehicles in the Chinese market than it did. According to CNEVPost, the reason for that could have been the company's pricing policy.

Chinese customers have taken the price reductions in a pretty bad way. Some even invaded and vandalized Tesla Service Centers after paying prices that were reduced just days after their purchases. The current theory is that possible new buyers decided to wait for the prices to drop even more before buying a new Tesla.

That theory is confirmed by several moves from the BEV maker. The first happened on April 14, when Grace Tao shared several charts on her Weibo account. Tesla's vice president of external affairs wanted to show how the company's Chinese products cost less in China than anywhere else they were sold. In other words, she wanted to show there was no way they could get any cheaper. It did not work.

That was when Tesla decided to raise prices for the Model 3 and Model Y. On May 2, the company started asking RMB2,000 ($289 at the current exchange) more from customers. The low increase was interpreted more as a message that prices would not be reduced any more than as a real need to raise the prices the BEV maker had just made smaller. On May 5, Tesla also increased the values for the Model S and the Model X.

It is not clear if these measures will help the company reverse the sales drop it has experienced recently. That probably has more to do with how old the company's lineup looks, especially for Chinese customers. With a wide variety of new BEVs to choose from, people will only pick a Tesla if they are worried about where to charge. Tesla's Supercharging network is an asset, but it will be less crucial when the BEV maker opens some of these stations to other vehicles in an attempt to receive government incentives. Making its chargers more profitable can also be a valid reason.

On top of that, Tesla has a reputation problem in China that it is not trying to fix in the best way. Sudden unintended acceleration episodes keep popping up there, and all the company has done so far is blame the drivers or even sue them when they accuse Tesla of selling them defective vehicles.

The American BEV maker also recently lost for the third time a lawsuit for fraud. The company sold Han Chao a certified pre-owned Model S in May 2019. While Tesla said it had "no major accidents" and "no structural damage," Chao discovered it had to have its C-pillar replaced after a crash. Tesla will have to pay him RMB1,518,800 ($219,781), but the main issue was being convicted for something so serious, especially against a customer.

Paying less for any product is always good news when that does not affect other customers, only the competition in any given industry. In Tesla's case, the price reduction strategy was flawed for loyal customers (who felt cheated), for new customers (who wished to pay even less), for the company (which prevented its own sales with its unpredictable tactics and jeopardized the residual values of its cars), and for its investors. There are more than one tried-and-true ways to do that: creating new derivatives, a new model, promotions, you name it. Tesla supporters should only hope for one thing: that the company learned why legacy carmakers follow these paths.