• Hertz said expensive repairs helped inform its decision to downsize its EV fleet. 
  • The move is a warning to potential EV owners about "hidden" costs. 
  • Repairs for EVs can cost more than those for gas-powered cars. 

Hertz is backtracking on its big EV bet.

The car-rental firm said it's selling 20,000 EVs — or about one-third of its electric fleet of Teslas, Volvos, Polestars, and more — in part due to their cost of repairs and maintenance.

It's a big blow to the EV industry, already in the throes of slowing growth as the wave of early adopters dries up and prices remain stubbornly high for potential buyers. 

In a Thursday note to clients, Morgan Stanley analyst Adam Jonas called the move "another sign that EV expectations need to be reset downward across the market."

It's also a warning to drivers thinking about switching from gas to electric about the costs of EV ownership.

"While consumers enjoy the driving experience and fuel savings (per mile) of an EV, there are other 'hidden' costs to EV ownership," Jonas added, citing insurance, repairs, charging infrastructure, residual value retention, and range anxiety.

Repairs

Repairs are one of the biggest culprits contributing to a higher cost of ownership for EV drivers.

Mitchell, which supplies data for insurance and repair companies, has found EVs — and particularly Teslas — are more expensive to repair than gas-powered cars. The firm said repairs in the third quarter of 2023 cost an average of $5,552 for Teslas, $4,474 for other EVs, and $4,205 for everything else, according to Kelley Blue Book and Automotive News.

Servicing EVs may also be less convenient for some owners. Many EV startups operate on a direct-to-consumer model, so they may not have as many service centers as traditional automakers. That means some owners may have to drive long distances — or, in some cases, face hefty towing bills — for maintenance and repairs.

Charging 

To get the most out of an electric vehicle, it's usually recommended to install some form of fast charging at home. These chargers cost anywhere from $250 to $750, and installation can run somewhere around $1,600.

Depending on your state, the energy usage for overnight charging can get pricey as well. Washington is the most expensive state to charge in, with an average EV sedan fill-up costing around $50, according to Energy Innovation. States in the Midwest and on the East Coast are less expensive, with averages closer to $20 per full charge.

And if you run out of battery on a road trip, a gas can isn't going to cut it — and tow trucks are expensive. (Though there is a growing ecosystem of roadside assistance for EVs.)

Maintenance

You might actually save some money here. There aren't pistons to lube or spark plugs to change in an EV, but that doesn't mean there's nothing to keep up. 

Brake pads, for instance, may not wear as fast thanks to regenerative braking, but the tires typically handle more weight due to heavy batteries. Electric cars' instant acceleration means more wear and tear, too. 

Other features requiring regular maintenance, like windshield wipers and suspensions, are universal in both EVs and gas-powered vehicles. 

Insurance

Insurance premiums on EVs tend to be higher since they're a function of MSRP and repair costs, Kelley Blue Book has said. 

The average new car sells for around $46,000, and the average new EV costs closer to $50,000, according to JD Power. Insurance premiums for all cars average around $146 a month, according to Insurify.

Depreciation 

A recent study from iSeeCars found that electric cars have an average five-year depreciation rate of 49.1%, compared to an industry average of 38.8%.

Among all EVs, Tesla's Model 3 fares the best in terms of resale values, falling only 42.9% in five years. But as Tesla offers more discounts for new models, that could quicken the pace of depreciation.

Of course, everyone's situation is different. There are many other variables that can impact the cost of ownership, such as driving frequency and length, weather, proximity to service centers, and more. And federal EV incentives of up to $7,500 can make EVs more affordable.