CEO steps down after being hit with expensive EV repairs and low resale prices following purchase of 100,000 Teslas
Hertz Global Holdings Inc. is replacing its chief executive officer in the wake of a disastrous bet on electric vehicles that the company began unwinding in recent months.
Stephen Scherr, who ran Hertz for just over two years after three decades at Goldman Sachs Group Inc., has decided to step down, the rental-car company said late Friday in a statement. It’s replacing him with Gil West, the former chief operating officer of General Motors Co.’s Cruise robotaxi unit. West also will join the board of directors on April 1, according to the statement, which confirmed an earlier Bloomberg report.
Scherr, 59, joined Hertz several months after it emerged from bankruptcy and started making splashy wagers 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., sending the automaker’s market capitalization soaring past the $1 trillion mark at the time.
Hertz doubled down on EVs in the months after Scherr took over, placing big orders with Polestar, the electric-car maker owned by China’s Geely and Sweden’s Volvo Car, and GM. The company ended up buying a small number of cars from the two companies, a spokesperson said.
Those bets went awry last year, when Tesla slashed prices across its lineup to keep growing vehicle sales. This hammered the resale value of used Model 3 sedans and Model Y crossovers just after Hertz had added tens of thousands of those vehicles to its fleet.
By December, Hertz started selling off 20,000 electric vehicles, or about a third of its EV fleet. Germany’s Sixt SE — a leading car-renter in Europe — is taking even more drastic measures, phasing Teslas out of its fleet entirely.
Hertz announced its EV sell-down plans in January, citing lackluster demand, costly depreciation and expensive repairs. The Estero, Florida-based company took a $245 million charge and reported its biggest quarterly loss since the pandemic.
Shares of Hertz fell 2% after regular trading in New York Friday.
Read More: Hertz’s Tesla Fire Sale Portends an EV Reckoning
Scherr’s successor, West, was one of nine Cruise executives that GM dismissed at the end of last year after California regulators accused the company of withholding information about one of its self-driving vehicles striking and dragging a pedestrian.
Prior to joining Cruise as COO in early 2021, West held the same position at Delta Air Lines Inc. There, he played an instrumental role in the integration with Northwest Airlines and was credited with improving efficiency and performance.
“Gil is a fantastic operator. We worked side-by-side for a dozen years,” Delta CEO Ed Bastian said an interview. “He’s an innovator, he loves technology, he’s meticulous, he’s curious and he loves a challenge — all great attributes.”Play Video
Even before they completed the Hertz acquisition, Tom Wagner at Knighthead and Greg O’Hara at Certares had identified West as a CEO candidate and approached him about leaving Cruise, according to two people with knowledge of those discussions who asked not to be identified. But GM, which had big plans for robotaxis at the time, didn’t want to let West go. So the investors installed Mark Fields, who’d run Ford Motor Co., as Hertz’s interim CEO and conducted a full CEO search, settling on Scherr in February 2022.
Once he’d left Cruise, Wagner and O’Hara approached West again, confident that by virtue of his firsthand experience with EVs and appreciation for the pitfalls of electrification, he’d be a better fit. And they liked that, as a resident of southwest Florida, he wouldn’t have far to travel to Hertz headquarters, the people said
West will be the latest in a long line of Hertz CEOs tasked with turning the company into a more profitable player and stiffer competitor for closely held Enterprise Holdings Inc. and Avis Budget Group Inc.
Before Knighthead and Certares swooped in to take Hertz out of bankruptcy, billionaire investor Carl Icahn struggled to put a shine on the century-old business as its controlling shareholder. Misreading the car market has cost Hertz in the past, including under John Tague, the former United Airlines COO whom Icahn installed as CEO in 2014.
Tague inherited an aging fleet from ousted CEO Mark Frissora and went long on passenger cars as consumer tastes were shifting to sport utility vehicles. He lasted a little more than two years in the job.
Hertz said Scherr will assist with the CEO transition until he leaves the company and its board on March 31.
