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Tesla’s Share Of Car Rental Business Falls To Record Low

By James Ovie

According to reports, the proportion of U.S. electric car manufacturer Tesla’s car rental business in its single-quarter business declined. One analyst said the trend may be related to weak resale values ​​of used electric vehicles.

Tesla said on Tuesday that in the fourth quarter of last year, only 2% of the sales of Model 3 and Model Y needed to be included in operating lease accounting subjects, and only 3% of the sales of other models needed to be included in operating lease accounting subjects. These two parts of the operating lease business are the lowest levels since Tesla began disclosing quarterly production and delivery data in 2019.

Philippe Houchois, an analyst at Jefferies, wrote in a note on Wednesday that the “sharp decline” in the share of operating leases suggests Tesla may struggle to provide consumers with quality leasing services. Attractive rental price. “The impact on short-term profitability is not necessarily negative, but we are still concerned about the lack of vehicle residual value management.”

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Car residual value refers to the value that a vehicle will retain during the life of the ownership or lease contract. When a car is less able to hold its value, lessors tend to charge customers more upfront or monthly fees to offset a sharp decline in value. This makes leasing less attractive than buying.

Residual values ​​of Tesla vehicles took a hit time and time again last year. The company has repeatedly cut prices on its electric vehicles, causing headaches for car rental companies such as Hertz and Germany’s Six SE.

Other automakers are leaning toward launching electric vehicle rental operations in the United States because of loopholes in the Inflation Reduction Act that make it easier for commercial vehicles to qualify for EV tax credits.

James Ovie
James Ovie
James Ovie is a tech Blogger with vast experience in mobile devices and other gadgets.

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