Hertz Global Holdings Inc. is replacing its chief executive in the wake of a disastrous bet on electric vehicles that has unraveled the company in recent months.
Stephen Scherr, who led Hertz for just over two years after three decades at Hertz Goldman Sachs Group Inc. has decided to resign, the rental car provider said in a statement late Friday. He will be replaced by Gil West, the former chief operating officer of General Motors Co.’s Cruise Robotaxi Unit. West will also join the board on April 1, according to the statement, which confirmed an earlier Bloomberg report.
Scherr, 59, joined Hertz a few months after its bankruptcy and began making promising bets on electric vehicles. Under new owners Knighthead Capital Management and Certares Management, the rental company announced plans to order 100,000 vehicles from Tesla Inc., causing the automaker’s market capitalization to skyrocket 1 trillion dollars mark at that time.
In the months following Scherr’s takeover, Hertz doubled its range of electric vehicles and placed major orders Polaristhe electric car maker owned by Geely of China and Sweden Volvo car, and GM. The company eventually purchased a small number of cars from the two companies, a spokesman said.
Those bets went wrong last year when Tesla reduced prices across the entire product range to further increase vehicle sales. This deteriorated the resale value of used Model 3 sedans and Model Y crossovers shortly after Hertz added Tens of thousands to add these vehicles to its fleet.
The Hertz sell-off began in December 20,000 electric vehiclesor about a third of its electric vehicle fleet. Germany’s Sixt SE – a leading car rental company in Europe – is taking even more drastic measures. Phase out Teslas his fleet completely.
Hertz announced its electric vehicle sales plans in January, citing weak demand, costly depreciation and expensive repairs. The Estero, Florida-based company took and reported a $245 million fee biggest quarterly loss since the pandemic.
Shares of Hertz fell 2% after regular trading Friday in New York.
Read more: Hertz’s Tesla Fire Sale Points to EV Billing
Scherr’s successor, West, was one of nine cruise executives heading GM dismissed Late last year, after California regulators accused the company of withholding information about one of its self-driving vehicles Hitting and pulling a pedestrian.
Before joining Cruise as COO in early 2021, West held the same position at Delta Airlines Inc. There, he played a critical role in the integration with Northwest Airlines and was held responsible for improving efficiency and performance.
“Gil is a fantastic operator. “We worked side by side for a dozen years,” Delta CEO Ed Bastian said in an interview. “He’s an innovator, he loves technology, he’s meticulous, he’s curious and he loves challenges – all great qualities.”Play video
Even before they completed the Hertz acquisition, Knighthead’s Tom Wagner and Certares’ Greg O’Hara had identified West as a CEO candidate and asked him to leave Cruise, according to two people with knowledge of those conversations who asked not to be named to become. But GM, which had big plans for robot taxis at the time, didn’t want to let West go. So the investors installed Mark Fields, who ran Ford engine Co. named interim CEO of Hertz and conducted an extensive CEO search, selecting Scherr in February 2022.
After he left Cruise, Wagner and O’Hara reached out to West again, believing he would be a better fit given his first-hand experience with electric vehicles and his understanding of the pitfalls of electrification. And they liked that, as a Southwest Florida resident, he didn’t have to drive far to Hertz headquarters, the people said
West will be the latest in a long line of Hertz CEOs tasked with making the company a more profitable player and tougher competitor to closely held Enterprise Holdings Inc. and Avis Budget Group Inc.
Before Knighthead and Certares stepped in to rescue Hertz from bankruptcy, billionaire investor Carl Icahn was struggling to turn the company around centuries-old business as majority shareholder. Misjudging the auto market has cost Hertz in the past, including under John Tague United Airlines COO, whom Icahn appointed as CEO in 2014.
Tague inherited an aging fleet from ousted CEO Mark Frissora and went by car for a long time as consumer tastes shifted toward sport utility vehicles. He remained in office for just over two years.
Hertz said Scherr will oversee the CEO transition until he leaves the company and its board on March 31.