Hertz just revealed plans of switching back to gas-powered vehicles

Hertz Global Holdings Inc (NASDAQ: HTZ) plans on selling 20,000 electric vehicles it currently has in its U.S. fleet. Shares of the car rental company opened in the red on Thursday.

Hertz will reinvest in gas-powered vehicles

The Nasdaq-listed firm also confirmed in its regulatory filing today that part of the proceeds from this sale will be used to reinvest in gas-powered vehicles.

Hertz cited higher repair costs and weak demand for electric vehicles for the switch that it expects will result in a non-cash charge of about $245 million in its fourth financial quarter.  

The company based out of Estero, Florida will report its Q4 results in early February. Consensus is for it to lose 2 cents a share versus 50 cents per share of earnings a year ago.

Hertz stock is currently down over 50% versus its 52-week high.

Hertz expects a boost to its free cash flow

Hertz Global Holdings Inc expects the sale of EVs and going back to internal combustion engines to improve corporate EBITDA and boost free cash flow by up to $300 million in 2024-25.

[We] expect this action to better balance supply against expected demand for EVs.

Note that the car rental company once had a strategy focused on electric vehicles. It had even announced plans of buying 100,000 Teslas in 2021. But EV sales have slowed down ever since – rising 1.3% only in the fourth quarter of 2023.  

Wall Street currently has a consensus “overweight” rating on Hertz stock.