The slump in electric vehicles is driving strong sales for Hertz, with the price of second-hand Tesla dropping to $25,000

The competition for $25,000 electric cars in the U.S. car market has already achieved victory, but not in the way the automotive industry hoped. The second-hand car sales of the traditional car rental company Hertz (HTZ.US) are booming, with the average price of its used cars dropping to $25,000.

According to the Securities Times app, since January this year, Hertz has adopted the Tesla sales model, with 20,000 electric vehicles from its global fleet entering dealer lots, accounting for nearly one-third of the company's existing electric vehicle inventory. This move is seen as a stumbling block to Hertz's electric vehicle strategy. In 2021, Hertz had planned to order tens of thousands of Tesla, Polestars, and General Motors battery electric vehicle models.

Although electric vehicle sales in the U.S. have more than quadrupled from 2020 to 2023, currently accounting for over 9% of total light vehicle sales, the growth rate has slowed down. Automakers are now focusing more on hybrid vehicle sales. However, the eventual transition to electric vehicles seems inevitable, as car companies are pushing for the development of electric vehicles: improving battery technology for longer range, expanding charging infrastructure, factors that are driving down electric vehicle prices rapidly, making electric vehicles priced relatively similar to fuel vehicles. In addition, reducing carbon emissions is also a top priority.

Therefore, now may be a good time to purchase a used Tesla through Hertz's long-standing car sales department, which has been operating since 1977 and has around 70 locations in the U.S. Buying a used car through Hertz, like other channels such as manufacturers, independent dealers, online markets, or private owners, has its pros and cons.

On the positive side, Hertz has a large number of electric vehicles for sale at "no-haggle" prices. A Hertz spokesperson said in an email, "Our electric vehicles are available in most major cities across the U.S., with an average price of around $25,000." All Hertz-certified vehicles undergo a 115-point inspection and come with a 12-month/12,000-mile (whichever comes first) limited powertrain warranty. Hertz also offers vehicle protection plans beyond the warranty period, as well as a seven-day or 250-mile buy-back guarantee. Like most used car retailers, Hertz offers trade-in and financing services. In addition, some used electric vehicles are eligible for up to a $4,000 federal tax credit, with some states offering tax credits or refunds as well.

On the negative side, although the age of the Hertz electric vehicle fleet is only a few years, these cars are often rented out, so the mileage may be higher compared to other used cars. Additionally, not knowing how the renters have used the vehicles may also mean more wear and tear.

Interested car consumers can consult online channels and take virtual test drives when purchasing Hertz and Tesla electric vehicles. Before actual test drives, there is still plenty of information available to learn. Of the 1,638 used electric vehicles listed in the "Electric Car Selection" section of the Hertz car sales website, 1,475 are "Hertz Certified," including 1,186 Teslas, 157 Volvos, 104 Mercedes-Benz, 125 Chevrolet Bolts, with significantly fewer pure electric Kias and Subarus These numbers will change in real time, but also show specific trends: a few weeks ago, out of a total of 2,242 electric cars for sale, there were 1,860 "Hertz Certified" electric cars, including 1,341 Teslas and 500 Chevrolet Bolts.

It is worth mentioning that the prices of used electric cars have been dropping significantly. A study by automotive research company iSeeCars in March found that the average price of used cars dropped by 3.6% year-on-year, but the price of used electric cars plummeted by 31.8%, equivalent to $14,418. Karl Brauer, executive analyst at iSeeCars, said in the report, "The price of used Tesla cars dropped by 28.9%, the largest decrease among all brands, mainly due to Elon Musk's significant price cuts on new Teslas."

In April of this year, iSeeCars released a report stating that all four models of Tesla are the fastest-selling in the used electric car market, with three of the cars ranking in the top four. Brauer said, "With an average selling price of $37,644, the fastest-selling used electric cars are $20,000 cheaper than the fastest-selling new electric cars. This is a price gap that manufacturers need to bridge to attract mainstream new car consumers."

Yossi Levi believes that three years is the "sweet spot" for used electric cars (including used Teslas), and as a car dealer, he expressed his views on buying new and used cars: "For consumers, the best value for money in the current market is used electric cars, and the best value for money is likely to be electric cars with a three-year age."

Hertz Tesla Model 3 Used Car Inventory and Details

Most of Hertz's used Teslas are 2022 and 2023 Model 3 sedans, with a base model range of 270 miles and a long-range version of about 350 miles. The price of Hertz Tesla ranges from $21,000 to $36,000. The website also lists 163 Hertz Rent2Buy electric cars, including some Teslas. This refers to a program offered in some states that allows consumers to rent an active car for up to three days or take a two-hour test drive for free. A Hertz spokesperson said, "If you purchase the car, all rental fees will be waived. Warranty and buyback guarantees also apply."

Each Tesla car sold by Hertz includes general and specific detailed information about the model. The AutoCheck (an alternative to CarFax) icon provides the car's history report, including accidents, recalls, and maintenance/repairs. One notable issue is that not all events related to damage are reported to AutoCheck, so it is recommended to have a third party inspect the used car before purchase.

While test driving and third-party inspections are wise, the entire transaction can also be completed online at Hertz's website and the car delivered, but at a cost: delivery within 75 miles costs $225, within 200 miles costs $350, and delivery beyond that distance is negotiable, for example, if a buyer lives in Massachusetts but finds their ideal car in Colorado Tesla Direct Sales, Online Car Market

Meanwhile, Tesla's official website has information on all new and used cars, all of which are manufacturer-certified, inspected, and warranted. As expected, the website lists more used cars than Hertz, dating back to as early as 2018. The price of the Model 3 ranges from $24,000 to $38,800.

Tesla used cars can also be purchased through various online markets. For example, CarMax lists 38 units of the 2021 Model 3, mostly long-range versions, with prices ranging from $26,000 to $37,000, depending mainly on mileage. Carvana has 133 units of the same model, priced from $26,000 to $38,000.

AI Assistance in Car Purchases

By 2024, there is a significant change in the car buying experience: artificial intelligence is introduced as a sales assistant. At the end of last year, automotive research and shopping websites Edmunds and CarGurus launched the ChatGPT tool, where accessing the chatbot requires a monthly subscription of $20 for ChatGPTPlus.

When asked the following question to the Edmunds bot: "I want to buy a used Tesla Model 3 from Hertz Car Sales. Can you provide relevant information and advice?" You may receive the following reply:

ChatGPT says it might be a good decision, then lists the features of the Model 3 and reiterates Hertz's certification and no-haggle pricing policy. It suggests checking the battery condition, software updates, and whether Tesla's original warranty is still valid. Like Hertz, ChatGPT also recommends test driving and independent inspection.

After asking the same question to the CarGurus GenAI tool, the CarGurus website displays 6 used Model 3s and dealer listings, without mentioning Hertz. When asked a follow-up question, "Can you tell me about the 2022 Tesla Model 3s being sold by Hertz Car Sales?" the result shows the same list, with some casual words about buying through Hertz.

When asked to compare the pros and cons of buying a used Tesla from Hertz, Tesla dealers, used car dealers, and private owners, the bot succinctly lists the advantages and disadvantages of each and gives advice: "Consider which factors are most important to you when making a decision, such as price, warranty, and peace of mind."

Chatbots do not make decisions for car buyers, but both of the above help condense a large amount of information for the questioner, which would otherwise require spending a lot of time searching online from various sources including Edmunds and CarGurus websites. In addition, the responses list Tesla from private dealers in the area, as well as the locations of Hertz Car Sales.

Consumers can also obtain this AI-generated information in person at Hertz Car Sales, Tesla, or private dealers. Eugene Park, Chief Product Officer at Edmunds, said, "These tools have the ability to help shoppers prepare more thoroughly and understand more information." "

For those who resist clichéd used car shopping experiences, perhaps one day soon, they can flip the script and ask salespeople: "Today, in order for me to sit in that car, you must do this."

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