Back in the early part of the pandemic, rental giant Hertz made history. It started adding Teslas to its rental fleet, in part to replace some of the cars it sold during the crisis to stay afloat. It seemed like a great move at the time—a way to get zero-emission rental cars on the road and maybe introduce drivers to EVs for the first time. But after struggling with repair costs and dramatically lower resale values—that's a big source of income for rental car companies—Hertz is unloading those cars in volume now.
But, there’s a silver lining here. As those cars exit the rental fleets and enter the used market, two and three-year-old Teslas are making their way to the used car market for not a lot of money. And boy howdy, are there some deals to be had.
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Hertz Sells off hundreds of its early fleet of EVs
Some ex-rental Teslas can be had for as little as $20,000. After the IRA used plug-in vehicle tax credit, the used examples could be had for as little as $16,000.
A quick nationwide search at Hertz’s own used car website reveals more than 700 EVs, most of them ex-rental Tesla Model 3s, going for dirt cheap. Whether it's in Tampa, Cincinnati, Phoenix, Philadelphia, or the greater Los Angeles area, Hertz consistently has a Tesla Model 3 somewhere in the range of $20,000 to $23,000. Chances are, these prices are likely way lower than your local Tesla store, Facebook marketplace private seller, or mom-and-pop dealership.
After the IRA’s used car $4,000 tax credit, it’s very possible to get an example into the $15,000 to $16,000 range, making them essentially half-off the price of a new Model 3.
Many of the cars are also part of Hertz’s rent-to-buy program, where a potential buyer can rent their example for three days before deciding. If they choose to purchase, that rental fee is waived.
Of course, there are some caveats. There’s not a lot of choice in the lower price range, most of the Model 3s are standard range plus, RWD single motor models, good for 263 miles when new. Hertz does have a few Dual Motor Long Range and Performance units for sale, but the higher prices make them ineligible for the IRA’s used tax credits.
Likewise, Hertz does have a sizable number of Model Ys for sale, but the deals on these cars aren’t as great. Although these cars have significantly fewer miles than the Model 3’s it has on offer, the pricing just isn’t all that competitive for what the brand is offering, partially because they’re too expensive and won’t qualify for the IRA’s used car tax credit.
At a price of roughly $34,000 for a used Model Y with 40,000 miles, that doesn’t make much sense against the discounted on-the-lot new Model Ys that are eligible for the full IRA new car EV tax credit, which could be had for around $35,000, depending on discounts, tax credits, and motor and range specification.
Of the cheap, IRA-eligible Model 3s Hertz does have, they’re pretty high mile examples for their age. Most of them on Hertz’s lot are in the 70,000 to 90,000-mile range, which means they don’t have that much of the 100,000-mile battery warranty left. That’s a lot of miles to pile on in the first two or three years of a car’s life. Our own Tim Levin and I both think that this meant these were likely part of Hertz’s rideshare program, which means they’ve probably lived a life harder than most Model 3s. That could mean constant DC fast charging that could accelerate battery degradation, and we can’t forget about the sheer number of guests and traffic in and out of the car, accelerating wear and tear.
It’s interesting to see just how much depreciation has affected Tesla vehicles. During the pandemic, we saw buyers flipping new cars for profit, with prices that were on par or even above offerings from Audi, BMW, or Mercedes-Benz. Now, dramatic price cuts, and Tesla’s requalification for EV tax credits have brought new examples to mainstream car levels. In 2021, a Tesla Standard Range Plus sedan would have been $44,990, not counting any taxes or destination fees. To sell that same car three years later for barely $20,000 certainly must be a bitter pill to swallow.
