Hertz is pumping the brakes on plans to electrify more of its rental car fleet after EV repair costs came in higher than the company anticipated, and after Tesla price cuts reduced the resale value of the majority of electric cars in its fleet by about one-third.
CEO Stephen Scherr said on the company’s third-quarter earnings update on Thursday, “our in-fleeting of EVs will be slower than our prior expectations.”
The rental car company reported lower than expected margins for the period ending September 2023, and the CEO said EV repairs were one challenge. “Our direct operating expenses remained controlled in the quarter as they grew with transaction volume. On a unit basis, we achieved productivity gains across most categories of auto. The exception remained vehicle damage costs, particularly those on our EVs.”
Scherr also said, “MSRP declines in EVs over the course of 2023, driven primarily by Tesla, have driven the fair market value of our EVs lower as compared to last year, such that as salvage creates a larger loss and therefore greater burden.”
Shares of Hertz closed down by around 10% on Thursday at $9.04 following the third-quarter update. Tesla shares also dipped around 3% on Thursday to close at $205.76.
Hertz also disclosed on Thursday that about 80% of the battery electric cars in its fleet are Teslas today. About 11% of Hertz’s entire fleet is comprised of electric cars now. With around 50,000 electric cars in its fleet currently, that means Hertz has around 35,000 Teslas in its fleet now.
That number is far shy of the 100,000 Tesla electric cars Hertz originally said it was ordering from Tesla by the end of 2022.
Hertz Global Chief Executive Officer Stephen Scherr said Hertz is still “committed” to buying 100,000 cars from Tesla and 175,000 EVs from GM, but is not on target to have EVs represent a quarter of its fleet by the end of 2024 any more as previously hoped.
“Our focus and our work with Tesla is to look at the performance of the car so as to lower the risk of incidents of damage,” Scherr said. “And we’re in very direct engagement with them on parts procurement and labor and the like.”
As Hertz buys up more EVs from GM and other automakers down the line, Scherr said on the company’s Q3 call, the company expects those electric vehicles to have a “lower incidence of damage,” and “a lower cost of parts and labor.”
“Remember, in the likes of GM and other OEMs, there’s decades of establishment of a broad national parts supply network. There’s an aftermarket of parts that that is there that is less mature obviously in the context of Tesla,” Scherr said, adding that margins and other EV issues would improve as Hertz looks to “diversify” that part of its fleet.
On October 25, 2021, Hertz first announced plans to grow its fleet of battery-electric vehicles with “an initial order of 100,000 Teslas by the end of 2022.” Tesla hit a $1 trillion market cap for the first time after the Hertz announcement.
A commercial featuring repeat Super Bowl champion Tom Brady, alongside parked Tesla Model 3 electric sedans in a Hertz garage, accompanied the announcement.
Tesla CEO Elon Musk waited until November 2, 2021, a week later, to inform Tesla shareholders in a post on Twitter, the social network he now owns and has rebranded as X, that Hertz had not signed any contract with Tesla for the high-volume order.
Musk frequently says that electric cars require less maintenance than counterparts with internal combustion engines (including plug-in hybrid electrics). That’s a big potential selling point for electric cars, and a reference to items like motor oil, oil filters, engine air filters, transmission fluid, spark plugs and other items requiring annual maintenance or scheduled replacements.
But electric vehicle owners can face unique maintenance needs, as well. Nikhil Naikal, CEO of Kinetic, a startup that is not affiliated with Hertz or Tesla but provides repairs for electric and autonomous vehicles, told CNBC on Thursday:
“The reality of electric vehicles is that they can be 1,000 pounds heavier or more than gas vehicles, and they move faster, with higher torque. Since they’re extremely zippy and heavier, it’s just physics — the ability to overcome inertia so quickly is going to effect their suspension systems, the brakes and steering columns. It’s counter-intuitive, but even with fewer moving parts they are susceptible to requiring more maintenance. They especially require tire-swapping, because the tires wear out more quickly from that high torque and weight.”
A worker delivers Amazon packages in San Francisco on Oct. 24, 2024.
David Paul Morris | Bloomberg | Getty Images
Amazon on Thursday announced Prime members can access new fixed pricing for treatment of conditions like erectile dysfunction and men’s hair loss, its latest effort to compete with other direct-to-consumer marketplaces such as Hims & Hers Health and Ro.
Shares of Hims & Hers fell as much as 17% on Thursday, on pace for its worst day.
Amazon said in a blog post that Prime members can see the cost of a telehealth visit and their desired treatment before they decide to proceed with care for five common issues. Patients can access treatment for anti-aging skin care starting at $10 a month; motion sickness for $2 per use; erectile dysfunction at $19 a month; eyelash growth at $43 a month, and men’s hair loss for $16 a month by using Amazon’s savings benefit Prime Rx at checkout.
Amazon acquired primary care provider One Medical for roughly $3.9 billion in July 2022, and Thursday’s announcement builds on its existing pay-per-visit telehealth offering. Video visits through the service cost $49, and messaging visits cost $29 where available. Users can get treatment for more than 30 common conditions, including sinus infection and pink eye.
Medications filled through Amazon Pharmacy are eligible for discounted pricing and will be delivered to patients’ doors in standard Amazon packaging. Prime members will pay for the consultation and medication, but there are no additional fees, the blog post said.
Amazon has been trying to break into the lucrative health-care sector for years. The company launched its own online pharmacy in 2020 following its acquisition of PillPack in 2018. Amazon introduced, and later shuttered, a telehealth service called Amazon Care, as well as a line of health and wellness devices.
The company has also discontinued a secretive effort to develop an at-home fertility tracker, CNBC reported Wednesday.
Former U.S. Army intelligence analyst Chelsea Manning says censorship is still “a dominant threat,” advocating for a more decentralized internet to help better protect individuals online.
Her comments come amid ongoing tension linked to online safety rules, with some tech executives recently seeking to push back over content moderation concerns.
Speaking to CNBC’s Karen Tso at the Web Summit tech conference in Lisbon, Portugal, on Wednesday, Manning said that one way to ensure online privacy could be “decentralized identification,” which gives individuals the ability to control their own data.
“Censorship is a dominant threat. I think that it is a question of who’s doing the censoring, and what the purpose is — and also censorship in the 21st century is more about whether or not you’re boosted through like an algorithm, and how the fine-tuning of that seems to work,” Manning said.
“I think that social media and the monopolies of social media have sort of gotten us used to the fact that certain things that drive engagement will be attractive,” she added.
“One of the ways that we can sort of countervail that is to go back to the more decentralized and distribute the internet of the early ’90s, but make that available to more people.”
Nym Technologies Chief Security Officer Chelsea Manning at a press conference held with Nym Technologies CEO Harry Halpin in the Media Village to present NymVPN during the second day of Web Summit on November 13, 2024 in Lisbon, Portugal.
Asked how tech companies could make money in such a scenario, Manning said there would have to be “a better social contract” put in place to determine how information is shared and accessed.
“One of the things about distributed or decentralized identification is that through encryption you’re able to sort of check the box yourself, instead of having to depend on the company to provide you with a check box or an accept here, you’re making that decision from a technical perspective,” Manning said.
‘No longer secrecy versus transparency’
Manning, who works as a security consultant at Nym Technologies, a company that specializes in online privacy and security, was convicted of espionage and other charges at a court-martial in 2013 for leaking a trove of secret military files to online media publisher WikiLeaks.
She was sentenced to 35 years in prison, but was later released in 2017, when former U.S. President Barack Obama commuted her sentence.
Asked to what extent the environment has changed for whistleblowers today, Manning said, “We’re at an interesting time because information is everywhere. We have more information than ever.”
She added, “Countries and governments no longer seem to invest the same amount of time and effort in hiding information and keeping secrets. What countries seem to be doing now is they seem to be spending more time and energy spreading misinformation and disinformation.”
Manning said the challenge for whistleblowers now is to sort through the information to understand what is verifiable and authentic.
“It’s no longer secrecy versus transparency,” she added.
LISBON, Portugal — British online lender Zopa is on track to double profits and increase annual revenue by more than a third this year amid bumper demand for its banking services, the company’s CEO told CNBC.
Zopa posted revenues of £222 million ($281.7 million) in 2023 and is expecting to cross the £300 million revenue milestone this year — that would mark a 35% annual jump.
The 2024 estimates are based on unaudited internal figures.
The firm also says it is on track to increase pre-tax profits twofold in 2024, after hitting £15.8 million last year.
Zopa, a regulated bank that is backed by Japanese giant SoftBank, has plans to venture into the world of current accounts next year as it looks to focus more on new products.
The company currently offers credit cards, personal loans and savings accounts that it offers through a mobile app — similar to other digital banks such as Monzo and Revolut which don’t operate physical branches.
“The business is doing really well. In 2024, we’ve hit or exceeded the plans across all metrics,” CEO Jaidev Janardana told CNBC in an interview Wednesday.
He said the strong performance is coming off the back of gradually improving sentiment in the U.K. economy, where Zopa operates exclusively.
Commenting on Britain’s macroeconomic conditions, Janardana said, “While it has been a rough few years, in terms of consumers, they have continued to feel the pain slightly less this year than last year.”
The market is “still tight,” he noted, adding that fintech offerings such as Zopa’s — which typically provide higher savings rates than high-street banks — become “more important” during such times.
“The proposition has become more relevant, and while it’s tight for customers, we have had to be much more constrained in terms of who we can lend to,” he said, adding that Zopa has still been able to grow despite that.
A big priority for the business going forward is product, Janardana said. The firm is developing a current account product which would allow users to spend and manage their money more easily, in a similar fashion to mainstream banking providers like HSBC and Barclays, as well as fintech upstarts such as Monzo.
“We believe that there is more that the consumer can have in the current account space,” Janardana said. “We expect that we will launch our current account with the general public sometime next year.”
Janardana said consumers can expect a “slick” experience from Zopa’s current account offering, including the ability to view and manage multiple account bank accounts from one interface and access to competitive savings rates.
IPO ‘not top of mind’
Zopa is one of many fintech companies that has been viewed as a potential IPO candidate. Around two years ago, the firm said that it was planning to go public, but later decided to put those plans on ice, as high interest rates battered technology stocks and the IPO market froze over in 2022.
Janardana said he doesn’t envision a public listing as an immediate priority, but noted he sees signs pointing toward a more favorable U.S. IPO market next year.
That should mean that Europe becomes more open to IPOs happening later in 2026, according to Janardana. He didn’t disclose where Zopa would end up going public.
“To be honest, it’s not the top of mind for me,” Janardana told CNBC. “I think we continue to be lucky to have supportive and long-term shareholders who support future growth as well.”
Last year, Zopa made two senior hires, appointing Peter Donlon, ex-chief technology officer at online card retailer Moonpig, as its own CTO. The firm also hired Kate Erb, a chartered accountant from KPMG, as its chief operating officer.
The company raised $300 million in a funding round led by Japanese tech investor SoftBank in 2021 and was last valued by investors at $1 billion.