Deployed: Tesla models are becoming too expensive for Sixt
Drive a Tesla once. If you want to fulfill this wish without having to commit yourself directly, you will quickly end up with the car rental company. At the European industry leader Sixt, however, it will be more complicated to rent or subscribe to a Tesla in the future. In a customer letter, which manager magazin has obtained, the Munich-based company states "that we are currently not purchasing any more Tesla vehicles". The stock of Tesla models in the rental car and subscription fleet is also currently being reduced. How does this fit in with the stated goal of having between 2030 and 70 percent electric cars in the fleet by 80?
In its letter, Sixt cites several reasons for the Tesla ban: "The demand for electric mobility is – and we are also registering this at Sixt – still well below the level of combustion engines," it says. In addition, higher list prices and repair costs for electric cars had a negative impact on the cost side.
That doesn't explain why Tesla, of all people, has now landed on the hit list. In the case of those cars, the residual values have fallen "particularly significantly", Sixt becomes more specific in the course of the letter. This is due to "discount campaigns by some manufacturers". Tesla, in particular, had lowered the prices for its new cars several times this year – and thus sent the residual values for used cars plummeting. "All in all, this leads to significantly higher holding costs for Tesla vehicles, which we of course have to take into account in our fleet decisions from a business perspective," Sixt continues.
The business relationship between Sixt and Tesla is special in that the rental company itself takes risks with the Californian models. To be more precise: Sixt buys Tesla vehicles, puts them on its own balance sheet and then has to see to it that it can get rid of them again on good terms. Sixt has other agreements with most other vehicle manufacturers, so-called "buy-back" agreements. In this case, the rental company and the manufacturer negotiate in advance the conditions under which the manufacturers will buy the cars back from the rental company, usually after about half a year. This makes business more predictable for Sixt and Co.
Less risk with BYD
For example, Sixt handles its business with BYD, Tesla's biggest competitor in the global electric car business. A deal with the Chinese manufacturer, according to which Sixt could temporarily buy up to 2028,100 vehicles from BYD by 000, made it into the headlines in autumn 2022. It is uncertain whether Sixt will ultimately call up the entire contingent. However, the company is sticking to the goal of having between 2030 and 70 percent electric cars in the fleet by 80, according to company circles. In the third quarter of 2023, the figure was 6 percent. The ramp-up is currently experiencing a dent, but a linear curve was not assumed from the outset.
According to information from manager magazin, Sixt has an average of 3000 Tesla vehicles in its fleet in the current year. The number is now likely to fall gradually. Sixt is not the only landlord to take a critical look at the Californians' pricing policy. A few weeks ago, Hertz CEO Stephen Scherr also complained: "The price reductions in electric cars over the course of 2023, mainly caused by Tesla, have caused the market value of the electric cars in our fleet to fall year-on-year." He estimated the loss in value at about a third. Hertz originally wanted to add up to 100,000 Tesla vehicles to its fleet, but the deal has now stalled.
A problem for Elon Musk (51)? The Tesla CEO wants to increase sales by 50 percent year after year, it is one of his central promises to investors. Landlords are likely to be an important channel with their high purchase volumes. But perhaps Musk has already taken precautions: In August, Tesla posted a job ad for a "program manager" who was supposed to build his own rental business in Texas.
However, Tesla is unlikely to enter the rental business any larger for the time being. In the ad, the manufacturer pointed out that the pilot program is aimed exclusively at Tesla insurance customers who need replacement mobility in the event of a repair.