The Tesla Model 3 and Model Y’s price cuts sure have been a boon to regular consumers. In many places, all across the world, the Model 3 and Model Y top the EV sales charts because it’s such a good deal. It offers aspirational luxury at a price that’s only a little bit more than mainstream brands. But, not everyone’s happy with Tesla’s price cuts. According to a report from Bloomberg, German-based rental car company Sixt has announced that it’s phasing out Tesla electric rental cars from its fleets because of reduced resale costs.

Sixt isn’t the first rental car company to push back on EVs. A few months ago, Hertz announced that its EV rentals were a money loser, with many of the benefits extolled by EV advocates never materializing. The cars broke down more often than expected and were more expensive to repair than the comparable ICE car. To add insult to injury, Hertz bought much of its fleet at the height of Tesla’s price wars – Tesla severely cut its pricing not long after it ordered hundreds of cars. The resultant price cuts and surge in sales have hurt resale value, Hertz said that residuals of EVs as a whole have dropped by about a third. For a rental company that will periodically replace its fleet, that’s not great news.

Sixt has a similar reasoning. High repair costs and lower residuals due to the reduced pricing have the brand thinking twice. However, whereas Hertz focused on slowing its investment in EVs as a whole, Sixt is specifically targeting Tesla vehicles. Sixt says that it still plans to electrify 90% of its fleet by the end of the decade, but at least for the foreseeable future, it probably won’t include new Tesla vehicles. 

Is this a sign of trouble in the EV world? Maybe. Tesla’s elevated repair costs and reduced residuals are likely mostly a Tesla problem, but there have been data that shows that EVs in general cost more to repair. A Consumer Reports survey recently showed that proportionally, EV drivers have complained about reliability woes more than ICE cars. These problems range from infotainment or build quality issues, but also battery, motor, and charging issues. 

Hopefully, manufacturers get these issues under control, electric vehicles should be simpler and easier to own than ICE vehicles. 

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