Hertz Global Holdings Inc. is replacing its CEO following a disastrous bet on electric vehicles that has begun to unwind in recent months.
Stephen Sher, who ran Hertz for just over two years after spending 30 years at Goldman Sachs Group Inc., has decided to step down, the rental car company announced in a statement late Friday. He will be replaced by Gil West, former chief operating officer of General Motors' cruise robotaxi division. West will join the board on April 1, according to a statement confirming an earlier report by Bloomberg.
Mr. Shah, 59, joined Hertz a few months after emerging from bankruptcy and began making big bets on electric cars. Under new owners Knighthead Capital Management and Certares Management, the rental company announced plans to order 100,000 vehicles from Tesla Inc., and the automaker's market capitalization was at the time $1 trillion. skyrocketed beyond that.
Read more: Hertz's electric vehicles and CEO turnaround are latest developments after coronavirus bankruptcy filing and deep relationship with Carl Icahn
Hertz has ramped up EV development in the months since Mr. Scheer took over, placing large orders with China's Geely Automobile, Polestar and General Motors, electric vehicle makers owned by Sweden's Volvo Cars. The company ultimately purchased a small number of cars from both companies, a spokesperson said.
Those bets went awry last year when Tesla lowered prices across its lineup to keep car sales growing. This led to a significant drop in the resale value of used Model 3 sedans and Model Y crossovers, just after Hertz added tens of thousands of Model 3 sedans and Model Y crossovers to its fleet.
By December, Hertz had started selling 20,000 electric vehicles, about a third of its EV fleet. Germany's Sixt SE, Europe's leading car rental company, is taking even more drastic steps and phasing out Teslas from its fleet completely.
Hertz announced plans to sell EVs in January, citing weak demand and rising depreciation and repair costs. The Estero, Florida-based company took a $245 million charge and reported its biggest quarterly loss since the pandemic.
Hertz stock fell 2% after regular trading in New York on Friday.
Read more: Hertz's Tesla fire sale bodes well for EV valuations
Shah's successor, West, was fired by GM late last year after California regulators accused the company of withholding information about an incident in which a self-driving car hit and dragged a pedestrian. He was one of nine Cruise executives.
Prior to joining Cruise as COO in early 2021, Mr. West held the same role at Delta Air Lines. There, he played a key role in the integration with Northwest Airlines and was credited with improving efficiency and performance.
“Gil is a great operator. We've worked together for over a dozen years,” Delta Air Lines CEO Ed Bastian said in an interview. “He's an innovator, he loves technology, he's methodical, he's curious, he loves challenges, all great qualities.” Play video
Even before the Hertz deal was completed, Knighthead's Tom Wagner and Celtares' Greg O'Hara had been considering West as a CEO candidate, two people familiar with the discussions said on condition of anonymity. It is said that he acknowledged this and asked him about leaving Cruise. But GM, which had big plans for robotaxis at the time, didn't want to let West go. Investors then appointed Mark Fields, who runs Ford Motor Co., as Hertz's interim CEO and conducted a full-fledged CEO search, settling on Scheer in February 2022.
After leaving Cruise, Wagner and O'Hara approached West again, convinced that his first-hand experience with EVs and awareness of the pitfalls of electrification made him a better fit. And as a Southwest Florida resident, he liked not having to travel far to Hertz headquarters, officials said.
Mr. West becomes the latest in a line of CEOs at Hertz, tasked with turning the company into a more profitable company and a stronger competitor to owners Enterprise Holdings Inc. and Avis Budget Group Inc. bear the burden.
Before Knighthead and Certares swooped in to pull Hertz out of bankruptcy, billionaire investor Carl Icahn was struggling to shine a light on the century-old company as its controlling shareholder. Misreading the auto market has cost Hertz in the past, even under John Tagyu, the former United Airlines chief operating officer whom Mr. Icahn appointed as CEO in 2014. Covered.
Mr. Tagoo took over an aging fleet from ousted CEO Mark Frissola and stayed in passenger cars for a long time as consumer tastes shifted toward sport-utility vehicles. He lasted a little over two years in that job.
Hertz said he will help Shah succeed as CEO until he retires from the company and its board on March 31.
