Sixt to cut back on EV rental fleet due to ‘low demand’

German car rental company Sixt is going to rent out fewer electric cars. It is a remarkable reversal for Europe’s largest car rental company, which has always prided itself on significantly reducing the carbon footprint of its rental fleet by achieving a 70-90% share of EVs in Europe by 2030.

According to the listed company, customers prefer cars with internal combustion engines. “We adjust our share of EVs based on consumer demand and can respond very quickly to changes in demand,” Sixt said.

Bad investments

Sixt, which had just under 10,000 plug-in cars out of nearly 170,000 vehicles last year, is following Hertz’s lead here. That put-on pause in February plans to buy thousands of EVs from the Polestar brand this year, and it announced in April that it planned to remove some 10,000 EVs from its fleet.

Purchases by rental companies are a boon for car manufacturers looking to sell large numbers. For rental companies, however, these purchases often do not turn out to be good investments. Both Hertz and Sixt indicated in recent months that they want to get rid of Tesla cars, for example, because they are expensive to maintain. In addition, the carmaker’s aggressive price cuts undermined the cars’ residual value.

A rental company’s major risk is the value of such a car at the end of the rental period. According to rental companies, the residual value of EVs drops faster than that of comparable combustion-engine cars, making it less interesting to resell the models at a later date.

Negative impact of €40 million in 2023

Sixt declined to give details this week about its fleet’s current number of EVs. Last year, the share hovered around 6%. As recently as January, Sixt made it understood that it would place an order for more than 250,000 cars with the international conglomerate Stellantis. This would involve a mix of combustion engine vehicles, hybrids, and electric cars.

Sixt achieved revenue of more than 3,6 billion euros last year. That’s up by 18% in 2022, a record year for sales. The falling value of used EVs has increased depreciation and losses from vehicle sales, leading to a negative impact of around 40 million euros in 2023. This year’s earnings before taxes are expected to be between 350 and 450 million euros.

“Too complex”

A survey by travel management company BCD, published in January, found that only around 20% of business travelers globally rent EVs. The reasons respondents offered for not booking electric options included “complex logistics” (46%), “low availability at the rental location” (35%), and the “short range” of EVs (33%).

The point is that the urgently needed acceleration of the adoption of zero-emission EVs is hereby postponed yet again by both users and intermediate suppliers, such as car rental companies, while the effects of climate change and global warming are becoming increasingly evident.