Hertz CEO Stephen Scherr’s departure from the rental car giant has underscored the challenges arising from the company’s ambitious foray into electric vehicles (EVs).

Citing what he termed a significant “distraction,” Scherr announced his resignation, prompting the appointment of Gil West, a former executive at Delta Airlines and General Motors, as the incoming chief executive officer, effective April 1.

Scherr’s departure coincides with Hertz’s challenges in managing increased repair expenses and subdued demand for electric vehicle (EV) rentals.

In January, Hertz disclosed in financial reports its “strategic decision” to divest approximately 20,000 EVs from its U.S. fleet, representing around one-third of its global EV inventory, in favour of bolstering its gas-powered vehicle portfolio.

Previously, the Biden administration had commended Hertz for its commitment to EVs, aligning with the president’s ambitious agenda to advance widespread electrification within the transportation industry as part of his climate initiatives.

The decision marks a notable shift for Hertz, as the company grapples with the repercussions of its EV investment. In a statement released last week, Hertz confirmed the leadership transition, with Scherr and West slated to collaborate closely to ensure a smooth handover.

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Tom Wagner, vice chair of Hertz’s board, expressed optimism about West’s ability to navigate the challenges ahead, particularly in light of the company’s commitment to expanding its EV fleet. “Gil’s experience as a successful leader in operationally intensive businesses will further strengthen the Company’s world-class team,” Wagner remarked.

West, in accepting his new role, conveyed his eagerness to build upon Hertz’s legacy and global footprint. “With a 106-year history,” West noted, “Hertz enjoys incredible brand strength and customer loyalty.”

Scherr, who assumed leadership in 2022 and oversaw the company’s emergence from bankruptcy, had championed Hertz’s strategic shift towards EVs. However, the initiative faced setbacks, with the company reporting a substantial loss despite an uptick in quarterly revenue earlier this year.

Acknowledging the challenges posed by EV maintenance costs and profitability, Scherr outlined plans to streamline the EV fleet, emphasising the company’s commitment to operational efficiency and financial resilience.

As Hertz transitions under West’s leadership, industry observers will closely monitor how the company recalibrates its strategy in response to the evolving dynamics of the EV market.

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