Back in 2022, Polestar announced a deal with Hertz for the car rental company to buy 65,000 EVs in five years starting from that point. Throughout 2022 and 2023, Hertz already purchased 20,000 of them, but now the deal is on hold.
According to Polestar CEO Thomas Ingenlath, Hertz CEO Stephen Scherr contacted him last year to ask whether the agreement could be paused in 2024, and that's exactly what ended up happening. So this year, Hertz isn't buying any more Polestar EVs.
This isn't the first recent bad news surrounding the EV brand - Volvo is dropping its stake in Polestar and basically fully handing it over to parent company Geely since it doesn't want to cover its share of the funding Polestar needs this year. For what it's worth, Polestar expects to become profitable next year. Speaking of 2025, Ingenlath says there is a "clear intention" to resume sales to Hertz in the future, but the companies would "have to review at the time" whether this will happen next year.
Interestingly, Polestar agreed to Hertz's pause request on the condition of Hertz not selling its current Polestar vehicles "early or too cheaply", Ingenlath told the Financial Times. They agreed that Polestar would have "the right to first refusal whenever" Hertz wants to "take htem out of the fleet", Ingenlath said. Polestar clearly doesn't want a bunch of cheap, used EVs from Hertz hitting the used market and thus depreciating its perceived brand value.
Unlike most car rental companies which operate a buyback model where the manufacturer agrees to repurchase the vehicle later at a set price, Hertz has an at risk model where it outright owns the cars it buys, which exposes it to said risk if the vehicles it holds depreciate significantly over time.
Hertz recently announced it would sell over 20,000 EVs from its US fleet, planning on using some of the proceeds to purchase more ICE vehicles, because EVs incur much higher expenses related to collision and damage. And it's not just a little more expensive to repair EVs - according to Scherr it costs the company about twice as much compared to ICE vehicles.