Business

Hertz to buy 65,000 electric cars from Polestar

April 4, 2022

Polestar CEO Thomas Ingenlath previously told Automotive News Europe that stretch goal for 2022 was to sell 65,000 cars. Polestar sold 29,000 cars in 2021, which represented a 185% increase from 2020, according to sales figures the company released in January.

Hertz plans to order the compact Polestar 2, one of the EV company’s two vehicles currently on the market. The model features an Android Automotive OS-powered infotainment system that includes built-in Google applications, and has a 270-mile estimated range on a single charge, according to the company. Polestar has announced plans to increase its two-car lineup with a medium-size SUV, a compact SUV and a sports sedan by 2024, as well as the Polestar O2, an electric roadster concept car.

“The partnership with a global pioneer like Hertz will bring the amazing experience of driving an electric car to a wider audience, satisfying a broad variety of our mutual customers’ short- and longer-term mobility requirements,” said Ingenlath in a joint press release Monday. “For many of them it may be the first time they have driven an EV, and it will be a Polestar.”

Polestar spun out from Volvo in 2017 and has now established itself as a standalone electric car brand, though it “enjoys specific technological and engineering synergies with Volvo Cars and benefits from significant economies of scale as a result,” according to the company. The company remains co-owned by Volvo and Volvo parent company Geely, a holding group focused on the automotive industry that recently released plans to go public in a deal expected to close in by mid-2022.

The EV maker made headlines after its Super Bowl ad seemingly swung at Elon Musk’s Tesla and SpaceX ventures with the promise: “No conquering Mars.”

Polestar vehicles will first be available to Hertz renters in Europe starting this spring, with rollout in North America and Australia starting in late 2022.

The agreement with Hertz will be a help in Polestar’s efforts to establish itself as an alternative to Tesla for those interested in electric vehicles. Tesla is by has the best sales of electric vehicles worldwide with nearly 1 million EV sales last year.

Polestar is competing with other pure electric vehicle makers such as Lucid, as well established automakers such as Ford (F), General Motors (GM), volkswagen (VLKAF) and Nissan (NSANF) which are selling EVs in either the United States or Europe, if not both markets.

Polestar’s sales to Hertz will also help introduce electric vehicles to the broader public. In the past automakers that were looking to break into a new market have made an effort to sell their cars to rental car companies as a way of introducing their cars to a broader range of customers, essentially giving them a chance at an extended test drive.

Rental car companies desperate for vehicles

The sales also help Hertz, which with all other rental car companies has been struggling to find new cars to buy for their fleets. The rental car companies sold off a large percentage of their fleets in the summer of 2020, when the pandemic caused air travel to grind to a near halt. The rental car companies needed to sell cars both to raise cash and because in many cases they didn’t have anyplace to park the cars they had. Hertz filed for bankruptcy during this period of time.

But once travel began to rebound, the automakers discovered they didn’t have the supply of computer chips they needed to build all the cars for which there was demand. So they concentrated on selling cars to retail customers, who typically pay more for cars than those businesses such as rental car companies that paid less than retail customers.

Rental car companies couldn’t buy the cars they needed to replenish their fleets, leaving some customers unable to rent cars they needed, especially in some vacation markets. The rental car companies have been forced to buy used cars for the first time to supplement their fleets, and to hang onto the cars they have longer than normal.

The lack of available rental cars has also driven up the price of car rentals. While the consumer price index, the government’s main measure of inflation, shows car rental prices down somewhat since last summer, they are still up 38% compared to February of 2020, just before the pandemic started affecting US travel.

There could be some problems for those who rent electric vehicles from Hertz or any other company, though, even if they are fans of EVs.

While the owner of an electric vehicle might be able to charge the car at their home overnight, someone who is traveling and in a hotel might not have that option available to them. And while using public charging stations might be less expensive than filling up a gas-powered car, especially with gas now above $4 a gallon in most of the country, it can take significantly longer to charge an EV than it does to fill up a gas tank.

— CNN Business’ Chris Isidore contributed to this report