Hertz continues to backtrack on its commitment to purchase more electric vehicles for its rental car fleet, as the Financial Times reports that the company has paused plans to acquire more EVs from Swedish automaker Polestar.
But a little more than a year later, Hertz had a change of heart, mostly because its acquired EVs had lost most of their value. Price cuts (mostly from Tesla), higher depreciation than expected, and spiraling repair costs have made EVs a bad business deal for Hertz. In total, the company said it expected to lose over $245 million on the agreements.
Hertz had a change of heart
It’s a disappointing turn for Hertz, which had previously set a target for 25 percent of its fleet to be electric by the end of 2024. Last month, Hertz said it would sell 20,000 Teslas, or roughly one-third of its electric fleet. And now its deal with Polestar has been put on pause.
Polestar CEO Thomas Ingenlath told Financial Times that he was contacted by Hertz CEO Stephen Scherr last fall about the pause. Between 2022-2023, the Swedish company had sold around 13,000 vehicles, according to Ingenlath.
Hertz also operates an “at risk” model, in which it owns the vehicles it purchases outright, as opposed to the “buyback” model used by some rental companies in which the manufacturer agrees to reacquire the vehicle at a set price.
Ingenlath told FT that Polestar agreed to waive the requirement to buy all 65,000 vehicles as long as Hertz agreed not to sell off its current stock of EVs too quickly or cheaply. Indeed, while Hertz’s used car sales portal is brimming with Tesla Model 3s for around $20,000, there are no Polestars currently listed.
To be sure, EV sales are still booming. Over 1 million plug-in vehicles were sold in the US in 2023, which is a new record. And the total share of the vehicle market is just under 8 percent, up from 6 percent in 2022, according to Kelley Blue Book. Still, a number of manufacturers have gotten over their skis on EV investments, and demand is a little softer than it was several years ago. That’s why you’re seeing a number of companies pause or pull back on some of their commitments — like Hertz.