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Car rental giant Hertz has paused the purchase of electric vehicles from manufacturer Polestar as the resale value of the EVs has plummeted, Polestar’s chief executive officer Thomas Ingenlath told the Financial Times on Monday.
Hertz, which was an early mover in buying EVs to rent to customers, signed in April 2022 an agreement with Polestar to buy 65,000 cars over five years. Polestar began delivering the first EVs to Hertz in June 2022. Hertz was initially receiving Polestar 2, which has established Polestar’s position as a premium EV manufacturer, the company said at the time.
However, Hertz and other car rental companies have recently started to sell the EVs they had previously purchased due to weaker customer demand for EV rentals.
Hertz, unlike other rental firms, has a more risky approach because it fully owns all the EVs it has bought and is losing money if the resale value slumps. As it did.
Polestar’s Ingenlath now tells FT that he was contacted by Hertz’s CEO Stephen Scherr in the autumn of 2023 to ask if the car rental giant could halt the purchase of EVs for 2024.
The EV manufacturer has agreed that it would waive the requirements for Hertz to buy a certain number of vehicles this year if it doesn’t sell the Polestars in its fleet too cheaply or too early, Polestar’s top executive Ingenlath told FT.
Sales of Polestar vehicles to Hertz would resume in the future, although the companies are set to review if these sales should restart next year, Ingenlath added.
Earlier this year, Hertz said in a regulatory filing to the SEC it is selling roughly one-third of its electric vehicle fleet, highlighting the risk of its first-mover strategy when it comes to EVs.
Hertz has made the strategic decision to sell around 20,000 electric vehicles from its U.S. fleet, or about one-third of the global EV fleet. Hertz expects to reinvest a portion of the proceeds from the sale of EVs into buying internal combustion engine (ICE) vehicles to meet customer demand, the car rental giant said in January.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com