In a recent development, German car rental company Sixt revealed its decision to phase out Tesla Inc.'s electric vehicles (EVs) from its fleet. The move comes as a result of concerns regarding the lower resale value of Tesla's vehicles, according to Bloomberg.

The decision by Sixt follows reports of Tesla's price cuts, which have negatively impacted the residual values of their vehicles. Additionally, higher repair costs associated with EVs have exacerbated the problem, further prompting Sixt's decision. The car rental company's email to customers highlighted these factors, suggesting a need to reconsider the inclusion of Tesla's EVs in their fleet.

While Sixt has not yet commented on the matter, Bloomberg reported that the company still intends to electrify a significant portion, aiming for up to 90%, of its fleet in Europe by the end of the decade. This indicates that Sixt's decision is specifically targeted at Tesla vehicles and does not reflect a broader shift away from EVs altogether.

This news comes in the wake of similar concerns raised by U.S. car rental company Hertz Global Holdings Inc. back in October 2021. Hertz expressed reservations about the value of their rental Teslas and their overall fleet value, echoing the challenges faced by Sixt.

The market response to this news was evident as Tesla shares traded 1.4% lower on Monday. Over the past three months, the shares have experienced a decline of approximately 4%. However, it is worth noting that Tesla's shares have still maintained substantial gains for the year, surging by 91% and outperforming the S&P 500 index.

As electric vehicles continue to gain traction in the automotive industry, concerns about their resale value and repair costs are becoming increasingly relevant. With rental car companies like Sixt and Hertz expressing apprehensions about these factors, it remains to be seen how other players in the industry will navigate the evolving landscape.

The news of Sixt's decision to phase out Tesla's EVs from its fleet serves as a reminder of the challenges faced by car rental companies as they navigate the transition to electric vehicles. It highlights the importance of addressing concerns regarding resale value and repair costs in order to achieve wider adoption and acceptance of EVs in the market.

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