Hertz Halts Plan to Buy 65,000 Electric Cars Amid EV Slump
Hertz is pausing its plans to purchase 65,000 electric vehicles from Polestar due to high repair costs and the stalling demand for electric cars.
Hertz Pauses EV Purchase Plans
Hertz, the rental car giant, has decided to scale back its ambitious plans to buy 65,000 electric cars from EV pioneer Polestar. This decision comes after Hertz announced its intention to sell off 20,000 electric vehicles, citing high repair costs as a significant factor.
The estimated $3 billion agreement between Hertz and Polestar in 2022 was seen as a significant step for electric vehicle adoption. However, with the global EV market experiencing a slump in demand and major automakers reducing their investments, Hertz faces potential losses if the resale value of its vehicles declines.
Polestar, which has been struggling to attract customers amid the wider EV slump, has agreed to pause the agreement with Hertz, with the condition that Hertz does not sell its current Polestar vehicles prematurely or at significantly reduced prices.
Challenges in the EV Market
The decision by Hertz to pause its EV purchasing plans is just one example of major automakers reevaluating their ambitious EV goals. General Motors, for instance, recently announced a shift in focus towards hybrid vehicles after previously planning to become an all-electric auto company.
Hertz's move is also reflective of the overall challenges facing the global EV market, including a slump in demand for electric cars. As a result, automakers and drivers alike are beginning to reconsider the viability and practicality of going electric.
Furthermore, Hertz's decision to sell off a portion of its electric vehicle fleet is a response to the high repair costs associated with these vehicles. By reducing their EV holdings, Hertz hopes to mitigate potential financial losses.
Impact on Polestar
The pause in the purchasing agreement with Hertz is not favorable news for Polestar, as the broader EV industry slump has made it difficult for Polestar to attract customers and meet its delivery targets. Additionally, Polestar's financial situation has been further complicated by the decision of part-owner Volvo to cease funding the Swedish automaker.
It remains to be seen how Hertz's decision will impact the relationship between the two companies and the future of Polestar's operations. The current challenges facing the EV market and the need to address repair costs have led Hertz to reevaluate its EV purchasing strategy.
