Hertz CEO Stephen Scherr

Hertz CEO Stephen Scherr

Hertz CEO Stephen Scherr resigned on Friday. Getty

Hertz Global Holdings Inc. replaces its CEO in the wake of a disastrous bet on electric vehicles that the company began winding down in recent months.

Stephen Scherr, who led 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 late Friday. It replaces 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, the statement said, which confirmed an earlier Bloomberg report.

Scherr, 59, joined Hertz just months after its 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., pushing the automaker’s market capitalization above the $1 trillion mark at the time.

Hertz doubled its electric car sales in the months after Scherr took over, placing large orders with Polestar, the electric car maker of China’s Geely and Sweden’s Volvo Car, and GM. The company ultimately purchased a small number of cars from the two companies, a spokesperson said.

Those bets backfired last year, when Tesla cut prices across its lineup to keep car sales growing. This depressed the resale value of used Model 3 sedans and Model Y crossovers, just after Hertz added tens of thousands of those vehicles to its fleet.

In December, Hertz started selling 20,000 electric vehicles, or about a third of its EV fleet. Germany’s Sixt SE – a leading car rental company in Europe – is taking even more drastic measures and completely removing Teslas from its fleet.

Hertz announced its plans to sell electric vehicles in January, citing lackluster demand, expensive depreciation and expensive repairs. The Estero, Florida-based company took a $245 million charge and reported its biggest quarterly loss since the pandemic.

Hertz shares fell 2% after regular trading in New York Friday.

Read more: Hertz’s Tesla Fire Sale Predicts an EV Billion

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 hitting and dragging 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 efficiency and performance.

“Gil is a fantastic operator. We have worked side by side for twelve years,” Delta CEO Ed Bastian said in an interview. “He is an innovator, he loves technology, he is meticulous, he is curious and he loves a challenge – all great qualities.”Play video

Even before completing the acquisition of Hertz, Knighthead’s Tom Wagner and Certares’ Greg O’Hara 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 to be identified. But GM, which had big plans for robotaxis at the time, did not want to let West go. So the investors installed Mark Fields, who founded Ford Motor Co. would run as interim CEO of Hertz and conducted a full CEO search to join Scherr in February 2022.

After he left Cruise, Wagner and O’Hara approached West again, confident that his firsthand experience with electric vehicles and appreciation for the pitfalls of electrification would be a better fit. And they liked that, as a Southwest Florida resident, he didn’t have to travel far to Hertz’s headquarters, the people said.

West will be the latest in a long line of Hertz CEOs tasked with making the company a more profitable player and a stronger competitor to closely held Enterprise Holdings Inc. and Avis Budget Group Inc.

Before Knighthead and Certares stepped in to lift Hertz out of bankruptcy, billionaire investor Carl Icahn struggled to market the century-old company as a controlling shareholder. Misreading the car market has cost Hertz a lot of money in the past, including under John Tague, the former COO of United Airlines who appointed Icahn as CEO in 2014.

Tague inherited an aging fleet from ousted CEO Mark Frissora and went long on passenger cars as consumer tastes shifted to SUVs. He held this position for just over two years.

Hertz said Scherr will assist with the CEO transition until he leaves the company and the board of directors on March 31.

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