Chinese-owned carmaker Polestar has continued to endure a tough start to the year, with its CEO confirming rental giant Hertz wants it to supply fewer vehicles.
The Financial Times reports word from Polestar CEO Thomas Ingenlath that he had been approached by Hertz boss Stephen Scherr last year, with the latter executive asking to pause the deal for 65,000 Polestar EVs to be supplied to the rental car company by 2027.
Mr Ingenlath reportedly said Polestar had agreed to waive the Hertz supply deal, on the proviso that the rental car company wouldn’t offload its EVs at a significantly lower price or too soon.
Hertz must also “keep the cars longer than a year, we work with them, and we have the right to first refusal whenever they want to take them out of the fleet”, Mr Ingenlath told the Financial Times.
When the deal was announced in 2022, it was reported to be worth US$3 billion (A$4.62bn) and was set to bolster Hertz’s plans for 25 per cent of its US rental fleet to be electric vehicles (EVs) by 2025 – a target which was meant to be supplemented by 100,000 Teslas.
However, last month Hertz announced it would sell 20,000 EVs from its US fleet due to rising depreciation and repair costs.
This announcement came less than three months after the first signs of trouble emerged with Hertz’s EV expansion plans, having received just 35,000 of the 100,000 Teslas it had initially ordered – among a fleet of US 50,000 battery-powered models.
According to the Financial Times, Hertz has left itself exposed to the risks of high depreciation on the secondhand car market, as the company uses a business model which sees it own its fleet outright, rather than with the option to sell its vehicles back to manufacturers for a set price.
The news follows a tough fortnight for Polestar, which first announced it was cutting 15 per cent of its workforce, with about 450 workers expected to be retrenched in the near future.
Last week, Volvo – which is the majority shareholder of Polestar with a 48 per cent stake in its former sub-brand – said it plans to cut funding to the company, offloading its responsibility to support the brand to parent company Geely.
Polestar has a fairly low headcount, with its vehicles manufactured by Volvo and Geely and using shared platforms.
