⚡👨🔧 Hertz Is Struggling To Contain EV Costs When Teslas Are Used For Uber
Rental giant Hertz, who recently announced agreement with NYC, very recently cited unsustainable and surprising repair costs associated with Teslas used in for-hire transport market
As we’ve previously written, NYC TLC Chair David Do’s favorite words these days seem to be “predatory leasing”. These are words that Do, and his TLC deputies, continue to repeat as they try to justify their shock decision to remove the EV exemption to the FHV License Pause (TLC Plate Cap). Well, we have a real life example from recently announced City fleet electrification partner Hertz, providing further proof of why EV maintenance and repair math is tricky.
Before we get into Hertz, some thoughts.
Firstly, and this might come off as a crazy concept, why don’t we have a TLC hearing specifically dedicated to the FHV leasing industry and make rules based on that hearing and study the industry (i.e., have someone at TLC do some math). For example, you can address any issues of “predatory” leasing with other policies and actions. There is not only one way to solve a problem. As we’ve and others have mentioned, FHV Lease Caps is an obvious solution. There is “copy & paste” regulatory precedent in the taxi medallion industry.
So why doesn’t Do call for this meeting? Chair Do has reached a conclusion and is solving backwards. A young, inexperienced bureaucrat from D.C. who thinks repeating something over and over again will make it true. This is New York, not D.C.. We like debate, we like things quantified and numbers presented. We operate under, again another potentially crazy concept for Do, an “innocent, until proven guilty” standard.
Furthermore, if you were trying to solve for helping individuals get out of said “predatory” leasing arrangements, why would you also open up TLC Plates to businesses and fleets? Why is Do allowing Revel, Hertz and other fleets to buy more vehicles and TLC plate them? In addition, ~70% of FHV Licenses (TLC Plates) are claimed directly by individuals, so the decision to reinstate the EV exemption actually risks reducing the vast majority of TLC driver earnings, who aren’t even subject to a lease (at all).
Finally, and again we don’t know Do’s financial and markets education, replacing “predatory” leasing companies the TLC CAN regulate with “predatory” lenders the TLC CANNOT regulate, is actually weakening the regulator’s ability to protect drivers, on top of making the problem he believes he’s solving, worse.
Chair Do should check the going rate for auto loans and recognize the TLC industry isn’t comprised of people who have prime credit scores (Note: a credit score is a prediction of one’s credit behavior, such as how likely one is to pay a loan back on time, based on information from your credit reports)
The below image was sent to us by a TLC insurance broker recently.
Here are the terms.
72 month loan (6 years)
24.40% annual interest rate
$1,221 monthly vehicle payment
Driver will end up paying $41,974 in interest expense over 6 years for $50,000 vehicle!
The lender, unless you lie to them, will require comp. & collision insurance. This coverage is currently difficult to find or prohibitively expensive for Teslas
Chair Do hopefully understands he doesn’t have the power to regulate the banking sector. If not, we hope someone will remind him of the limits to his powers. The TLC Chair’s logic is so convoluted that it genuinely makes us question his competence. If this is not a competence issue, then the only other explanation for TLC’s flawed policy is even worse.
Math is Math: Hertz Puts Brakes On EV Rentals to Uber Drivers
So, what specifically was cited in these articles. Remember, Hertz has immense financial resources and automotive expertise that individual drivers don’t have access to.
“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.”
- Hertz CEO Stephen Scherr
“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.”
- Nikhil Naikal, CEO of Kinetic
“Part of the problem is linked to Hertz’s plans to rent EVs to ridehail drivers. Of the 100,000 Tesla acquired by Hertz, half were to be allocated to Uber drivers as part of a deal with the ridehail company. And drivers said they loved the Teslas! But Uber drivers also tend to drive their vehicles into the ground. This higher rate of utilization can lead to a lot of damage — certainly more than Hertz was anticipating.”
The words above, not ours, speak for themselves. We do not understand why the TLC does not recognize how reckless and misleading it is being with its policy and statements, on several levels.
NYTWA vs. TLC Hearing Tomorrow?
A judge ⚖️ has now been assigned to the NYTWA case we mentioned yesterday and a decision could come as soon as tomorrow. Will NYTWA or TLC prevail? Will the EV exemption to the FHV License Pause (TLC Plate Cap) be revoked? Stay tuned!
As always, let us know your thoughts in the comments section below or by emailing us at firstname.lastname@example.org.
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