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EV slump, Hertz fire sale take used Teslas to 'no haggle' $25,000 price

1 month ago 40

The race to the $25,000 EV in the U.S. car market has been won, but not in the way the auto industry wanted.

Since January, Hertz Global Holdings has been in Tesla sales mode, with 20,000 electric vehicles from its global fleet, representing nearly a third of the rental-car company's existing EV inventory, on the dealer lot. The move, viewed as a stumble in Hertz's EV strategy — in 2021, it heralded plans to order hundreds of thousands of Teslas, Polestars and battery-electric GM models — also reflects a sobering up of the electrification hype within the U.S. auto industry, which has run into a consumer in 2024 spurning at least the expected pace of the transition away from gas-powered cars.

While EV sales in the U.S. more than quadrupled from 2020 to 2023, and now account for more than 9% of total light-duty vehicle sales, the pace of growth has slowed and automakers are focusing more on selling hybrids. Yet the eventual transition to EVs remains inevitable, as sticker prices become more in line with those of internal combustion engine (ICE) vehicles — something the sales slump is making happen even faster as auto companies attempt to move EVs — battery technology improves driving range and the charging infrastructure expands. And there is the overarching imperative to reduce the tons of climate-changing carbon emissions that cars and trucks produce.

Considering all that, now might be a good time to buy one of Hertz's used Teslas through its long-established Hertz Car Sales division, in business since 1977 and operating about 70 locations across the country. Although as with buying any used car — from manufacturers and independent dealers, online marketplaces or private owners — there are pros and cons.

On the plus side, Hertz has plenty of EVs that it's motivated to sell at what it calls no-haggle prices. "Our EVs can be found nationwide in most major metros and averaging around $25,000," said a Hertz spokesperson in an email. All of the Hertz-certified vehicles are given a 115-point inspection and include a 12-month/12,000-mile (whichever comes first) limited powertrain warranty. Hertz also offers vehicle protection plans that last beyond the warranty, as well as a seven-day or 250-mile buy-back guarantee. Hertz, like most used car retailers, offers trade-ins and financing. Also, some used EVs are eligible for up to $4,000 in federal tax credits, and several states offer tax credits or rebates. 

On the minus side, although the Hertz late-model EV fleet is only a couple of years old, the cars have been frequently rented, so the mileage can be relatively higher compared to other used vehicles. That could mean more wear and tear, since there's no telling how aggressively they've been driven.

Interested auto consumers can consult various online sources in the EV buying process when it comes to Hertz and Teslas, and take a virtual test drive. Of course, going to a dealer and taking a physical test drive is a must, but there's a lot to be learned before heading out the door. The Hertz Car Sales website "Shop EVs" button recently listed 1,475 of the 1,638 used EVs listed as "Hertz Certified." There were 1,186 Teslas, 157 Volvos, 104 Mercedes, 125 Chevrolet Bolts and far fewer all-electric Kias and Subarus. Naturally, those numbers can change from day to day, and the data suggest that the models are moving: a few weeks ago, there were 1,860 "Hertz Certified" EVs out of a total 2,242 for sale, including 1,341 Teslas and 500 Chevy Bolts.

Used EV prices have been falling hard. A March study by automotive research firm iSeeCars found that the average used car price was down 3.6% from last year, though used EV prices had plummeted 31.8%, equating to $14,418 in value. Used Tesla prices dropped 28.9%, the most of any brand, "largely driven by Elon Musk's aggressive price cuts on new Teslas," said iSeeCars executive analyst Karl Brauer in the report.

In April, iSeeCars reported that all four of Tesla's models are among the fastest-selling used EVs, with three of its cars in the top four slots. "With an average price of $37,644, the fastest-selling used electric vehicles are $20,000 cheaper than the fastest-selling new EVs," Brauer said. "This is the pricing gulf manufacturers need to bridge to engage mainstream new-car shoppers."

Three years is considered a "sweet spot" among used electric cars, including used Teslas, according to Yossi Levi, who as the Car Dealership Guy opines about buying new and used cars. "The best bang for the buck for consumers in the market today, bar none, is the used electric vehicle," he said. "And the best-value purchase is likely a three-year-old EV."

Hertz Tesla Model 3 used inventory and the fine print

The majority of Hertz's used Teslas were 2022 and 2023 Model 3 sedans, which when new had a driving range of 270 miles for the base version and around 350 miles for the long-range one. The Hertz Teslas were priced between $21,000 and $36,000. The site also listed 163 Hertz Rent2Buy EVs, including some Teslas. That refers to a plan, offered in select states, that lets you rent an active rental car for up to three days or take a complimentary two-hour test drive. "If you purchase the car, all the rental charges will be waived." the Hertz spokesperson said. The same warranty and buy-back guarantee apply.

Each individual Tesla for sale through Hertz includes general information about the model and details on that specific vehicle. The icon for AutoCheck (an alternative to CarFax) provided the car's history report, including accidents, recalls and servicing/repairs. There is a notable caveat: Not all damage-related events are reported to AutoCheck. It recommends having pre-owned vehicles inspected by a third-party prior to purchase.

Although a test drive and third-party inspection are advisable, it is possible to complete the entire transaction with Hertz online and have the car delivered, for a fee. The charge starts at $225 for delivery within 75 miles, goes to $350 for up to 200 miles, and is a negotiated for longer distances. That might be an option if, let's say, the buyer lives in Massachusetts and finds the perfect car in Colorado.

Tesla direct sales, online car markets

The official Tesla website, meanwhile, has information on all of its new and used vehicles, all of them certified, inspected and warrantied by the manufacturer. As to be expected, the site listed more used vehicles than Hertz, dating back as far as 2018. Model 3 prices ranged from $24,000 to $38,800.

Buying a pre-owned Tesla is also possible through a few different online marketplaces. For example, CarMax listed 38 2021 Model 3s, mostly long-range versions and priced from $26,000 to $37,000, primarily depending on mileage. Carvana had 133 of the same models, ranging from $26,000 to $38,000.

Asking gen AI to help in car buying process

In 2024, there's one other major change in the car shopping experience: artificial intelligence brought into the mix as a sales assistant. Late last year, ChatGPT tools were launched by automotive research and shopping websites Edmunds and CarGurus. Accessing the chatbots does require a subscription to ChatGPT Plus, for $20 a month.

Prompting the Edmunds bot with the following question — "I am thinking of purchasing a used Telsa Model 3 from Hertz Car Sales. Can you provide information and advice? — led to this response:

"Can be a great decision," ChatGPT said. It then listed features of the Model 3 and reiterated Hertz's Certified and no-haggle pricing policies. It suggested checking battery condition, software updates and whether Tesla's original warranty is still in effect. Like Hertz, the bot advised a test drive and independent inspection.

The same question posed to the CarGurus GenAI tool led to a half dozen used Model 3s and links to dealer listings on the CarGurus website, but no mention of Hertz. A follow-up question — "Can you tell me about 2022 Tesla Model 3s being sold by Hertz Car Sales?" — produced the same listings, plus some perfunctory points about purchasing through Hertz.

When prompted to compare buying a used Tesla from Hertz versus a Tesla dealer; and a used car dealer or a private owner, the bot neatly delineated the benefits and drawbacks for each, concluding with the following advice: "Consider what factors are most important to you — such as price, warranty, and peace of mind — when making your decision."

The chatbots weren't going to make the decision for the car shopper, but both chatbots conveniently condensed a lot of information that standard online searching would take loner to compiled across several separate sources — including the Edmunds and CarGurus websites, which listed Teslas at private dealers in the region, as well as Hertz Car Sales locations. That's no surprise, as it is the prime directive of GenAI at its basic level.

"We believe this will help customers potentially find cars within that haystack, if you will, that they maybe wouldn't have been able to find with our existing filters and sort of go at it on their own," said Matt Quinn, CarGurus' chief technology officer.

Consumers armed with such AI-produced information should be adequately educated once they show up in person at a Hertz Car Sales location or a Tesla or private dealership. "These tools have the ability to help shoppers become more prepared and informed," said Eugene Park, chief product officer for Edmunds. "Frankly, I think the best dealerships appreciate having shoppers that are ready to buy."

For those who dread the clichéd used car shopping experience, the day may soon be coming where they can flip the script and ask the salesperson, "Here's what you have to do to put me in that car today."

Read more: The basics of buying used EVs

Correction: Subaru EV models are among the used EVs available through Hertz Car Sales. An earlier version of this article misspelled the auto company's name.

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