Hertz slashes Tesla prices, get a Model 3 for under $20K

Hertz may have been a pioneer that no one wanted to follow, at least when it came to its goal of buying 100,000 Tesla Model 3 EVs for customers to rent.

The attempt to be a market leader in electric rentals backfired in glorious fashion. The battered and once-bankrupted car rental company soon discovered how few people want to rent an EV, how much it costs to repair it, and worst of all, the plummeting depreciation that makes a meteor’s descent seem rather conservative.

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What happened with the Hertz Teslas?

You could blame the rental company's situation on either Hertz or Elon. Hertz's flawed strategy played a part, while Elon's frequent price cuts aimed at attracting customers added to the challenge.

Tesla lowered the price of its Model 3 multiple times over the past couple of years. In 2022, you had to dole out $48,190 for the entry-level Model 3. That dropped to $38,990 by 2023 and $29,990 by the end of 2024, adding up to a total drop of over $18,000. To add insult to injury, the overall EV market depreciates six times faster than gas cars, according to automotive research firm iSeeCars.

That depreciation equates to about $537 per car for Hertz. Add to that the steep repair costs and frequent renter-caused accidents, and you have the makings of a fire sale. Hertz has been trying to dump 30,000 of its total EV fleet faster than you can say “panel gaps,” and while that doesn’t mean Hertz is done with EVs, its goal is to only hold onto the minimum quantity needed to satisfy renters who want access to an EV.

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An EV opportunity knocks

Hertz is still trying to sell its remaining Model 3s directly to consumers, and the prices are hard to ignore. For those interested in an affordable EV other than a Nissan LEAF, your ship may have just come in.

At the time of writing, there are several Model 3s left, ranging from a 2022 Model 3 Base with higher miles for $19,594 to a 2023 Model 3 Base with less than 35k miles for $26,053. Any of the Model 3s available for sale significantly undercut the LEAF and any other new EV available for sale today.

What’s more, every Tesla Model 3 for sale by Hertz has gone through an exhaustive 115-point pre-delivery inspection and comes with a warranty through the company’s Hertz Certified program.

Hertz Certified and Rent2Buy vehicles come with a 12-month/12,000-mile limited powertrain warranty (not bumper-to-bumper, mind you). There’s a small $100 deductible to cover, but at least you have the peace of mind that your new-to-you Tesla Model 3’s battery and motors are covered for a decent period of time.

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The warranty also provides roadside assistance, car rental coverage (from a car rental company, no less!), and travel breakdown protection. In addition, there’s a manufacturer battery warranty of 96 months/100,000 miles, but keep in mind that it takes effect on the date Hertz themselves first purchased the Tesla.

Should you bite?

As with any used vehicle, electric or not, there come certain risks. Sure, there are fewer parts on EVs, but that doesn’t mean you won’t encounter issues during and after the warranty period. It’s important to know that Teslas aren’t known for superb reliability, placing #17 out of 22 brands in the 2024 Consumer Reports reliability ranking.

It’s not just the frequency of issues that’s the issue, but also the cost of repairs should your Tesla be involved in a collision. According to KBB, an average restoration repair for a Tesla costs $5,552 versus $4,474 for other brands’ EVs and $4,205 for gas cars. Reliability issues and the astronomical cost of repair might be enough to send potential buyers running.

The upside of grabbing one of the remaining Hertz Teslas is the sheer savings. Getting a two-year-old Tesla for $20k with a warranty is quite a bargain. If you shop anywhere else, you’d have to settle for a Model 3 that’s at least a few years old to net the same price point. This means you get a newer Tesla Model 3 for less money than you would typically find on the secondary market.

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What’s more, Hertz likely does a pretty good job of performing maintenance and replacing wear-and-tear components whenever they’re needed and following the manufacturer’s service schedule, which is more than you can say for most car owners.

The rental company also has a Vehicle Recall Policy whereby they don’t rent or sell any vehicle if it has received a recall notice that involves more than 5,000 units. Even if an interim repair approved by the manufacturer has been performed, that vehicle can be rented but not sold until it undergoes final repairs to satisfy the recall requirements. Again, this is more than you can say for many vehicles in the secondary market.

The flip side is the dreaded reputation of rental car abuse, as well as the fact that these cars aren’t exactly one-owner vehicles. They’re driven by multiple renters and acquire a lot more miles than average.

A two-year-old Tesla Model 3 with 120,000 miles on it has been driven over four times the national average of 14,263 miles annually. Those aren’t all highway miles, either. When shopping for a used car, most buyers tend to look at how many owners the vehicle has had. Hertz can’t exactly give you that list, and you probably don’t want it.

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Final thoughts

There are few guarantees in life, and buying a used Telsa EV from a rental car company isn’t one of them, so weigh your options carefully. At least Hertz is backing their cars up with more than just “as-is” and includes a warranty that's better than most used car dealers would offer.

Make sure you get the vehicle thoroughly inspected and know the warranty terms. If the reality of high mileage, poor reliability, and multiple owners scares you, look elsewhere.

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