Hertz Global Holdings Inc. is replacing its CEO following 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 car rental company said in a statement Friday evening. He will replace him with Gil West, the former chief operating officer of General Motors Co.’s Cruise robotaxi unit. West will also join the board of directors on April 1, according to the statement, which confirms an earlier Bloomberg report.
Scherr, 59, joined Hertz several months after emerging from bankruptcy and began making splashy bets 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 above the $1 trillion mark at the time.
Hertz has doubled down on its electric vehicle efforts in the months since Scherr’s arrival, placing large 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 spokeswoman said.
These bets went awry last year, when Tesla cut prices across its lineup to continue growing vehicle sales. That hammered the resale value of used Model 3 sedans and Model Y crossovers soon after Hertz added tens of thousands of those vehicles to its fleet.
In December, Hertz began selling 20,000 electric vehicles, or about a third of its EV fleet. Germany’s Sixt SE, one of Europe’s largest car rental companies, is taking even more drastic measures, phasing out Teslas from its fleet.
Hertz announced its plans to sell electric vehicles in January, citing poor demand, expensive depreciation and costly repairs. The Estero, Florida-based company took a $245 million charge and reported its largest quarterly loss since the pandemic.
Hertz shares fell 2% after regular trading Friday in New York.
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Scherr’s successor, West, was one of nine Cruise executives that GM fired late last year after California regulators accused the company of withholding information about one of its self-driving vehicles that had hit and dragged a pedestrian.
Before joining Cruise as COO in early 2021, West held the same position at Delta Air Lines Inc. There, he was instrumental in the integration with Northwest Airlines and was credited with improving the efficiency and performance.
“Gil is a fantastic operator. We’ve worked side by side for a dozen years,” Delta CEO Ed Bastian said in an interview. “He’s an innovator, he loves technology, he’s meticulous, he’s curious and he loves challenges – all great attributes.”Play video
Even before completing the Hertz acquisition, Knighthead’s Tom Wagner and Certares’ Greg O’Hara had identified West as a CEO candidate and asked him to leave Cruise, according to two people familiar with those discussions who asked not to be identified. identified. But GM, which had big plans for robotaxis at the time, didn’t want to let West go. So investors named Mark Fields, who ran Ford Motor Co., as Hertz’s interim CEO and conducted a comprehensive CEO search, settling on Scherr in February 2022.
Once Cruise left, Wagner and O’Hara turned to West again, confident that, by virtue of his first-hand experience with electric vehicles and his appreciation for the pitfalls of electrification, he would be a better fit. And they liked the fact that, as a southwest Florida resident, he wouldn’t have to travel far to reach Hertz headquarters, the people said.
West will be the latest in a long line of Hertz CEOs tasked with transforming the company into a more profitable player and stronger competitor to Enterprise Holdings Inc. and Avis Budget Group Inc.
Before Knighthead and Certares stepped in to lift Hertz out of bankruptcy, billionaire investor Carl Icahn fought to burnish the century-old company as its controlling shareholder. Misreading the auto market has cost Hertz dearly in the past, including under John Tague, the former United Airlines COO who Icahn named CEO in 2014.
Tague inherited an aging fleet from ousted CEO Mark Frissora and bet big on passenger cars as consumer tastes were shifting toward sport-utility vehicles. He lasted just over two years on the job.
Hertz said Scherr will assist in the CEO transition until he leaves the company and its board of directors on March 31.